estácio 3 q09

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Corporate Presentation

� Largest post-secondary education group in Latin America

� 201k students spread throughout 76 campuses in all major cities in Brazil

� 78 programs tailored to large and underserved middle and lower income individuals

� 54 Distance Learning accredited units strategically located

ESTÁCIO Highlights

� 54 Distance Learning accredited units strategically located in major centers

� R$1 billion in LTM Net Revenues and R$107 million in LTM EBITDA, R$229 million in Net Cash

Corporate Presentation 2

141135

144

162167

178

207 201

History and Current Status

Turnaround andPreparation for IPO

Turnaround andPreparation for IPOStrong Organic GrowthStrong Organic Growth

National Leadership

(Accounting and Management Systems)

IPO (July/07)

GP (May/08)

Efficiency Gains and

Consolidation

Efficiency Gains and

Consolidation

CAGR of 14.3% - 2000/2007 (Vs 8.9% for Brazil)

Un

der

gra

du

ate

Stu

den

ts

(in

th

ou

san

d)

Early StagesEarly

Stages

23 2635

51

70

118

141135

144

3

Begin National Expansion

1970/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

North and Northeast: subsidiaries for profit status

Main subsidiary with for profit status (Feb/07)

IPO (July/07)

Asset Light Model: Long Term Leasing Agreements (Campuses)

9M09

Un

der

gra

du

ate

Stu

den

ts

(in

th

ou

san

d)


16.1%15,1%15.0%

12.9%12.2%12.2%

11.8%11.6%

9.1%8.4%8.1%

6.8%6.0%

5.2%4.0%3.8%

1.8%

MACEJN

FLORJF

BHBEL

MCPVIT

ARACRECSAL

VVCG

NATGOSP

CTB

Largest Student Base: 201 k undergraduate students

3.6 13.3

0.7

4.5

3.3 11.0

Market-Share per Municipal1

1.6

4.2 2.9

1.6

6.0

Estácio Students per State (th.)

35.1%31.0%

18.5%16.1%

RJOURFOR

MACE

4

4.6

2.0

1.6 3.1

1.4

3.2 21.3

Source: SINAES/20061 – Undergraduate students enrolled (excludes public universities)

� Average Ticket: R$435 (9M09;+5.5% yoy)

University

University Center

College

Upgrade to University Center(in process of approval with the MEC2)

108.2 2.5


2 – Ministry of Education

Shareholder Structure and Corporate Governance

Large Expertise in the Education Sector

National Expansion and Market Leadership

Active Management Meritocracy CultureProven track record in the Brazilian Market (Gafisa, Lame, Ambev, Submarino, ALL, Magnesita and others)

Founder Shareholders

GP Investments

53% 20% 27%

Free Float

5

Corporate Governance Standards

• Listed at Novo Mercado: Only Voting Shares

• 100% Tag Along Rights

• Independent Board Members

Dividend Policy (Shareholder Agreement)

• Fiscal Council

• Internal Audit and Risk Management

• Audit and Compensation Committee

• Clear Shareholder and Corporate Structure


� Co-Management �� 5 years (renewable for 2+ years)

� Board Members �� 4 each party (being 2 independent)

� Lockup period of 3 years

� Leading Private Equity Firm in LATAM /First Listed Stock

� Mission: Generate Exceptional Long-Term Returns to its Investorsand Shareholders

� Outstanding performance of invested

Shareholder Agreement with GP

Highlights of Shareholder Agreement

� Lockup period of 3 years

� M&A Agreement

� Non-Competition Agreement

� Minimum Dividend Payout (50% of Net Income)

� Outstanding performance of investedcompanies, with integrity, clear targets,entrepreneurship, meritocracy and professionalism. Some examples:

IRR: 1,339%(3 year investment)

IRR: 148%

(3 year investment)

IRR: 17%(12 year investment)

IRR: 24%

(10 year investment)

6Corporate Presentation

� Scale and strong balance sheet pave the way for profitable growth, with major levers being:

� Efficiency gains through centralization of business processes

� Quality gains through investments in standardized high quality academic offerings

Value Creation Going Forward

standardized high quality academic offerings and differentiated student support services

� More impactful branding and marketing, coupled with selective M&A approach (“can´t miss” add-ons)

� Attraction and retention of high quality talents


� Focused on growing and underserved addressable market: middle and low income groups

� 1.9 million students graduating from High School every year

� 7% net enrollment growth (CAGR 2002-2007)

� Quality at affordable cost / location

Value Creation Going Forward

� Quality at affordable cost / location

� Career improvement to working adults


� Recent accreditation by Ministry of Education (MEC) of 54 Distance Learning units strategically located in major cities throughout Brazil (ranked with grades “Very Good” and “Good”)

� Satelite units for sales and infra structure support in advanced negotiations

� High growth, high margin with low incremental investment

� Lower prices and flexible schedules to access larger students prospects base

Distance Learning (DL)

92

4,6

49

99

5,8

73

1,0

15

,86

8

1,1

08

,60

0

1,1

51

,10

2

1,2

01

,04

6

1,1

98

,50

6


66

4,4

74

79

2,0

69

92

4,6

49

99

5,8

73

1,0

15

,86

8

1,1

08

,60

0

1,1

51

,10

2

1,2

01

,04

6

1,1

98

,50

6

5,2

87

6,6

18

20

,68

5

14

,23

3

25

,00

6

12

7,0

14

21

2,2

46

30

2,5

25

43

0,2

59

2000 2001 2002 2003 2004 2005 2006 2007 2008

New Students (Onground) - Private Inst. New Students (Online / DL) Private Inst.

� Recent Start-up of Shared Services Center (SSC):

�Macro transactional / back office processes fully centralized

�Streamlining of backoffice headcount

Efficiency Gains Through Centralization of Business Processes

�Lower transaction cost with higher quality (SLAs)

�Key for scalability and profitable growth and acquisitions integration


� Investment in high quality, standardized academic offerings:

� 41 Core programs being updated and nationally integrated towards labor market demands and better integration of shared disciplines: lower faculty costs

Quality Gains

faculty costs

� Better quality control with standardized lectures outlines, content, exercises and exams banks

� Digital platform aimed at quality self-learning activities at minimized costs

� Reference books and printed materials tailored made granted in all 41 core programs included in tuitions


� Improved Students Support Services

� New, fully integrated portal - prospects and students

� Tracking of students performance for proactive support approach (“Gabaritando”)

Quality Gains

� Roll-out of national standardized students relationship support

� Sourcing of new students

� Renewals

� Renegotiations

� Internship programs


� More impactful branding, marketing and sales efforts

� National branding� Research oriented new media choices� Structured “on-the-road” sales team for cost

effective and more resilient student sourcing (companies and schools)

Growth

Building highly scalable platform for maximum optimization of acquisitions

� Standard academic model� Strong national brand with high quality

products and services� Centralized backoffice (“plug and play”)


� Result oriented management model and compensation scheme

� Budgetary discipline in all business and support areas (Zero Based Budget and goals orientation)

� Monthly tracking of results and acting upon deviations

� “On-the-Road” management and leadership by CEO and

Permanent Pursuit of Highest Quality Management Model and Professionals

� “On-the-Road” management and leadership by CEO and executive officers

� Zero Based and Matrix Budget / internal and external benchmarks

� Integrated systems (SAP and academic systems)

� Streamline of organizational structure and processes (process standardization / back office centralization)


General and Administrative Expenses (G&A)Streamline of Organizational Structure

Shared Services Center

System Integration & Process Review

Zero Based /Matrix Budgeting

General and Administrative Expenses (G&A)Streamline of Organizational Structure

Shared Services Center

System Integration & Process Review

Zero Based /Matrix Budgeting

Widest Scope for Margin Improvement in the Industry

21.9%20.3%

EBITDA MARGIN (9M09)

22.4%

Drivers of

AEDU KROT SEB ESTC

Cost of Services - Common Subjects

- Course Standardization

- Improved “Production Planning” (Students per Teacher)

- On-Line Programs

Distance Learning

Extra-Class Activities

Cost of Services - Common Subjects

- Course Standardization

- Improved “Production Planning” (Students per Teacher)

- On-Line Programs

Distance Learning

Extra-Class Activities

15

12.1%

Drivers ofEfficiencyGains


Financial Highlights

(R$ million) 2005 2006 2007

Net Revenue1 762 829 851

Adjusted EBITDA1

Adjusted EBITDA Margin 11%

56 96 95

12%7%

980

98

10%

9M08 9M09

727 764

85 93

12% 12%

2008

16

Adjusted Net Income2 60

EBITDA Margin ex-rental 16% 20% 20%

EBITDA ex-rental1 124 164

Net Cash

23

(4)

73

229(48)

11%

166

12%7%

(1) Adjusted in 2007, to the payment of taxes in January 07 (SESES became for profit in February 2007), Law 11.638 in 2008 and one-off expenses in 2008 and 2009

(2) Excluding goodwill amortization from acquisitions and one-ff expenses

10%

182

19%

72

191

12% 12%

148 161

20% 21%

68 66

271 229



Appendix


12%

22%25% 26%

47%

64%

72%

82%

Sector Overview – Significantly Untapped Demand

Post-secondary Enrollments – (Unesco – 2007, million) Gross Enrollment Rate (Unesco - 2007)

Largest market in Latin America, with low penetration rates and increasing demand for qualified labour

High Growth Potential

23.4

17.5

12.9

9.2

4.9 4.1

31% 30% 29% 28% 27% 26% 25% 25%

69% 70% 71% 72% 73% 74% 75% 75%

2001 2002 2003 2004 2005 2006 2007 2008

Private Public

3.0 4.74.23.9 4.53.5 4.9 5.1

183 195 207 224 231 248 249 236

1,208 1,442

1,652 1,789 1,934 2,022 2,032 2,016

2001 2002 2003 2004 2005 2006 2007 2008

Private Public

India China Brazil Mexico Chile Argentina Russia USA

18

Source: INEP/MEC

Post-secondary Institutions in Brazil (units) Total Enrollments (million)


China USA India Russia Brazil Japan

Sector Overview: Highly Fragmented Market

Top10 largest post-secondary institutions account for less than 25% of total enrollments1

Top 10 Non-Government Institutions Market Share

Based on Number of Enrolled Students

Non-Government Institutions (number & Size)

2K < 4.9K

687

204

500 < 1.9K

5K or more140

22.6%

Up to 499

19

High Potential for Consolidation

2,032 Institutions3.5 million enrollments

1,001


(1) Source: Hoper Educational , MEC

77.4%

10+ Others

Sector Overview – Regulatory Framework

University

� Autonomy, guaranteed by the constitution, to create programs within the city (except for Medicine, Law, Psychology and Odontology)

�Allowed to create campuses outside the city, subject to authorization by the Ministry of Education (MEC)

� Ability to register diploma without the MEC authorization

� Autonomy, guaranteed by federal gov’t decree, to create programs inside the city, except

� 1/3 of faculty must hold a master or PhD degree

� 1/3 of faculty must be in full time regime or must offer 3 master programs with CAPES (ministry’s graduate coordinator) recommendation

� Need to conduct research


CostsBenefitsInstitution

20

University Centers

decree, to create programs inside the city, except for Medicine, Law, Psychology and Odontology

� Ability to register diploma without MEC authorization

� No need to conduct research

Colleges � No minimum requirements on faculty qualification or hours of work ( full time regime)


� 1/5 of faculty must be in full time regime

� Not allowed to create other campuses outside the city

� No autonomy to create new programs, vacancies or to register diplomas without the MEC authorization


6

762829 851

980

727764

Undergraduate Student Base and Revenue Growth

Students (thousand) Net Revenue (R$ million)

201

162 167 178

207 196 195

2005 2006 2007 2008 9M08 9M09

onground DL

2005 2006 2007 2008 9M08 9M09


9.5% NR 9.8% NR

4.9% NR 5.2% NR

R$ 437.1 M R$ 467.8 M

6.0% NR 6.9% NR

R$ 211.0 M (29.0% NR)

R$ 211,4 M (27.7% NR)

Cost of Service and SG&A (R$ million)

Cost of Services SG&A

Gross Margin: 39.9% Gross Margin: 38.8%

R$43.5 M R$52.8 M

45.7% NR 46.2% NR

9M08 9M09

Faculty Costs Rental Third-Party Services/Other

23.0% NR 20.7% NR

9M08 9M09

G&A Selling

22

NR = Net Revenue

R$167.5 M R$158.5 M


60

73 7268 66

56

96 95 98

8593

Adjusted EBITDA and Net Income (R$ million)

Adjusted Net Income2Adjusted EBITDA1

7.3%

11.6% 11.1% 10.0%

11.7%

12.1%

23

2005 2006 2007 2008 9M08 9M09

56

2005 2006 2007 2008 9M08 9M09

23

1 - Adjusted in 2007 to the payment of taxes in January 2007 , Law 11.638 in 2008 and to the one-off expenses in 2008/2009

2 - Excluding goodwill amortization from acquisitions and one-off expenses


Organic Capex (R$ million)


20.413.5

47.0

35.0

3Q08 3Q09 9M08 9M09

Analyst Coverage & Forecast

CS 08/31 R$ 27.0

1,019R$ 26.0

Brokers

Analyst Coverage & Forecast

2009 2010 2011 2012R$ million

Report Date

TargetPrice

Bradesco

NetRevenue

EBITDANet

Income

09/29 109 81

1,065 120 87

NetRevenue

EBITDA NetIncome

1,057 127 94

1,207 164 119

1,143 143

NetRevenue

EBITDA NetIncome

NetRevenue

EBITDANet

Income

116 1,247 173 148

1,300 187 133 1,415 218 157


Santander

Average

10/05

09/17

R$ 23.6

R$ 28.0

11/06 R$ 25.0

06/28 R$ 27.5MorganStanley

ITAÚ

BES

1,010 116 77

1,058 127 95

999 107 69

1,011 99 65

164

1,105 157 113

1,153 174 140

1,064 138 101

1,121 152 131

1,254 208 149

1,304

1,187

1,269

248

179

171

184

138

154

1,415

1,400

1,449

1,428

218

247

315

215

157

176

236

199

1,240 1871,113 149 113771121,025 144

1,336 229 188

1,368 231 183

11/27 R$ 30.0BTG 1,011 104 63 1,087 131 94 1,221 176 137 1,298 220 176

Capitalization and Market Data

Sound balance sheet and strong cash flow support our strategic positioning as one of the main players in sector consolidation in Brazil

R$ Million 09/30/09

Shareholders Equity

Debt

476.7

(6.8)

Net Cash 229.2

Stock Price (Dec - 08, 2009): R$23.89 / share

Number of Shares: 78.6 million

Market Cap: R$1.9 Billion

Enterprise Value: R$1.7 Billion

Daily Volume (3-month average): R$1.5 million

BRA: 6%

US: 38%

Europe: 40%

Others: 16%

26

Free Float: 27%Market Data


IR Contacts and Disclaimer

Visit our website: www.estacioparticipacoes.com

Investor Relations Team:

Lorival Luz – CFO

Fernando Santino – [email protected]

Matheus Guimarães – [email protected]

e-mail: [email protected]

Phone: (55) 21 3311 9789 / 9790 / 9791

Fax: (55) 21 3311 9676

Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floorCep 22775-040 - Barra da Tijuca - Rio de Janeiro

27

Disclaimer:

This presentation may contain forward-looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results; these are ere

projections and, as such, are based solely on the Company management’s expectations regarding the future of the business and its continuous access to capital to financeEstácio Participações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performanceof the sector and the Brazilian economy as well as other factors and are, therefore, subject to changes without previous notice. We are a holding company, and our only assets areour interests in SESES, STB, SESPA, SESCE, SESPE, SESAL, SESSE, SESAP, UNEC, SESSA and IREP, and we currently hold 99.9% of the capital stock of each of thesesubsidiaries. Considering that the Company was incorporated on March 31 2007, the information presented herein is for comparison purposes only, on a proforma unauditedbasis, relative to the first three months of 2007, as if the Company had been organized on January 1 2007. Additionally, information was presented on an adjusted basis, in orderto reflect the payment of taxes on SESES, our largest subsidiary, which from February 2007, after becoming a for-profit company, is subject to the applicable taxation rulesapplied to the remaining subsidiaries, except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparisonpurposes should not be considered as a basis for calculation of dividends, taxes or for any other corporate purposes.


estácio 3 q09

Education

9m09 corporate presentation

quality gains investment

shareholder structure

adults corporate presentation8

corporate governance

new students online

high margin

high school