EstáCio Morgan Stanley Conference 09

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Corporate Presentation

Largest post-secondary education group in Latin America

202k students spread throughout 77 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 in major centers

R$1 billion in LTM Net Revenues and R$110 million in LTM EBITDA, R$224 million in Net Cash

ESTÁCIO Highlights

Corporate Presentation 2

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 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

Value Creation Going Forward


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

Career improvement to working adults

Value Creation Going Forward


Largest Student Base: 202 k undergraduate students

5

3.5 12.8

0.6

4.7

4.3

1.8

1.4

3.0 11.6

2.9

1.2

3.0 22.1

Market-Share per Municipal1

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

Average Ticket: R$424 (1H09;+3.1% yoy)

University University Center College

Upgrade to University Center(in process of approval with the

MEC2)

110.2 2.7

1.5

4.3 3.0

1.4

5.8

Estácio Students per State (thousand)

35,1%31,0%

18,5%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%

RJOURFOR

MACEJN

FLORJF

BHBEL

MCPVIT

ARACRECSAL

VVCG

NATGOSP

CTB


2 – Ministry of Education

23 2635

51

70

118

141135

144

162 167178

207 202

History and Current Status

6

Begin National Expansion

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

Turnaround andPreparation for IPO

Turnaround andPreparation for IPOStrong Organic GrowthStrong Organic Growth

National Leadership

North and Northeast: subsidiaries for profit status

Main subsidiary with for profit status (Feb/07)

(Accounting and Management Systems)

IPO (July/07)

GP (May/08)

Efficiency Gains and

Consolidation

Efficiency Gains and

Consolidation

CAGR of 25.7% - 1997/2005 (Vs 13.5% for Brazil)

Asset Light Model: Long Term Leasing Agreements (Campuses)

1H09

Un

de

rgra

du

ate

Stu

de

nts

(i

n t

ho

us

an

d)

Early Stages

Early Stages


Shareholder Structure and Corporate Governance

7

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%

Corporate Governance Standards

Free Float

• 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

M&A Agreement

Non-Competition Agreement

Minimum Dividend Payout (50% of Net Income)

Leading Private Equity Firm in LATAM / First Listed Stock

Mission: Generate Exceptional Long-Term Returns to its Investors and Shareholders

Outstanding performance of invested companies, 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)

Shareholder Agreement with GP

8

Highlights of Shareholder Agreement


664.

474

792.

069

924.

649

995.

873

1.01

5.86

8

1.10

8.60

0

1.15

1.10

2

1.20

1.04

6

5.28

7

6.61

8

20.6

85

14.2

33

25.0

06 127.

014

212.

246 36

9.76

6

2000 2001 2002 2003 2004 2005 2006 2007

Ingressantes ES Privado Presencial Ingressantes ES à Distância

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


New Students (Onground) – Private Inst. New Students (Online / Distance Learning) – Private Institutions

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

Macro transactional / back office processes fully centralized

Streamlining of backoffice headcount

Lower transaction cost with higher quality (SLAs)

Key for scalability and profitable growth and acquisitions integration

Efficiency Gains Through Centralization of Business Processes


Investment in high quality, standardized academic offerings:

40 Core programs being updated and nationally integrated towards labor market demands and better integration of shared disciplines: lower 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 40 core programs included in tuitions

Quality Gains


Improved Students Support Services

New, fully integrated portal - prospects and students

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

Roll-out of national standardized students relationship support

Sourcing of new students

Renewals

Renegotiations

Internship programs

Quality Gains


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)

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”)

Growth


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 executive officers

Zero Based and Matrix Budget / internal and external benchmarks

Integrated systems (SAP and academic systems)

Streamline of organizational structure

Streamlined processes (process standardization / back office centralization)

Permanent Pursuit of Highest Quality Management Model and Professionals


KROT AEDU SEB ESTC

General and Administrative Expenses (G&A)Streamline of Organizational StructureShared Services CenterSystem Integration & Process ReviewZero Based /Matrix Budgeting

General and Administrative Expenses (G&A)Streamline of Organizational StructureShared Services CenterSystem Integration & Process ReviewZero Based /Matrix Budgeting

Cost of Services - Common Subjects- Course Standardization- Improved “Production Planning”

(Students per Teacher) - On-Line Programs

Distance LearningExtra-Class Activities

Cost of Services - Common Subjects- Course Standardization- Improved “Production Planning”

(Students per Teacher) - On-Line Programs

Distance LearningExtra-Class Activities

Widest Scope for Margin Improvement in the Indutsry

15

12%

22%

17%

EBITDA MARGIN (1H09)

25% Drivers of Efficiency Gains


Financial Highlights

16

Adjusted Net Income2 60

(R$ million) 2005 2006 2007

EBITDA Margin ex-rental 16% 20% 20%

EBITDA ex-rental1 124 164

Net Revenue1 762 829 851

Net Cash

23

(4)

73

229(48)

Adjusted EBITDA1

Adjusted EBITDA Margin 11%

56 96 95

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

980

98

10%

182

19%

72

191

1H08 1H09

476 513

51 61

11% 12%

92 106

19% 21%

39 44

256 224


2008


17

Appendix


12%22% 25% 26%

47%

64%72%

82%

Índia China Brasil México Chile Argentina Rússia EUA

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

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

2001 2002 2003 2004 2005 2006 2007

Private Public

3.0 4.74.23.9 4.53.5 4.9

183 195 207 224 231 248 249

1.208 1.442

1.652 1.789 1.934 2.022 2.032

2001 2002 2003 2004 2005 2006 2007

Private Public

Sector Overview – Significantly Untapped Demand

18

Fonte: INEP/MEC

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

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


Up to 499

Sector Overview: Highly Fragmented Market

19

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

High Potential for Consolidation

2,032 Institutions3.5 million enrollments

Top 10 Non-Government Institutions Market Share

Based on Number of Enrolled Students

Non-Government Institutions (number & Size)

2K < 4.9K

1,001

687

204

Numbe

r of i

nstit

utio

ns

500 < 1.9K

5K or more140

Number of students

22.6%

77.4%

10+ Others


(1) Source: Hoper Educational , MEC

Sector Overview – Regulatory Framework

20

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

University Centers

Autonomy, guaranteed by federal gov’t 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)

1/3 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

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

CostsBenefitsInstitution


Undergraduate Student Base and Revenue Growth

21

Students (thousand)Students (thousand) Net Revenue (R$ million)Net Revenue (R$ million)

CAGR: 8.5%

CAGR: 8.7%

+ 7.9%

+ 4.7%


162 167178

207

193202

2005 2006 2007 2008 1H08 1H09

762829 851

980

476513

2005 2006 2007 2008 1H08 1H09

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

22

Cost of Services

NR = Net RevenueNR = Net Revenue

SG&A

Gross Margin: 39.3%Gross Margin: 39.3% Gross Margin: 38.3% Gross Margin: 38.3%

R$111.2 M

R$28.4 M R$35.3 M

R$105.2 M


23.4% NR 20.5% NR

6.0% NR 6.9% NR

1H08 1H09

G&A Selling

R$ 139.6 M (29.4% NR)

R$ 140.6 M (27.4% NR)

46.3% NR 46.8% NR

9.4% NR 9.6% NR

5.0% NR 5.3% NR

1H08 1H09

Faculty Costs Rental Third-Party Services/Other

R$ 288.9 M R$ 316.3 M

56

96 95 98

5161

2005 2006 2007 2008 1H08 1H09

23

60

73 72

3944

2005 2006 2007 2008 1H08 1H09

Adjusted EBITDA and Net Income (R$ million)

23

Adjusted Net Income2Adjusted EBITDA1Adjusted EBITDA1

1 - Adjusted in 2007 to the payment of taxes in January 2007 , Law 11.638 in 2008 and to one-off expenses in 2008/20091 - Adjusted in 2007 to the payment of taxes in January 2007 , Law 11.638 in 2008 and to one-off expenses in 2008/2009

2 - Excluding goodwill amortization from acquisitions and one-off expenses2 - Excluding goodwill amortization from acquisitions and one-off expenses

7.3%

11.6% 11.1% 10.0%

10.7%

11.9%


Organic Capex (R$ million)

24Corporate Presentation

7.814.8

26.621.64.3

21.2

2Q08 2Q09 1H08 1H09

Organic

Acquisition

Organic

Analyst Coverage & Forecast:

25Corporate Presentation

Santander

CS

Average

10/05

08/31

09/17

R$ 23.6

R$ 27.0

R$ 28.0

- -

1,019R$ 26.0

06/28 R$ 27.5

Brokers

Analyst Coverage & Forecast

2009 2010 2011 2012R$ million

Report Date

Target Price

Bradesco

NetRevenue

EBITDANet

Income

MorganStanley

ITAÚ

BTG*

09/29 109 81

1,065 120 87

NetRevenue

EBITDA NetIncome

1,010 116 77

1,058 127 95

999 107 69

- - -

1,057 127 94

1,207 164 119

1,105 157 113

1,153 174 140

1,064 138 101

- - -

1,143 143

NetRevenue

EBITDA NetIncome

NetRevenue

EBITDA NetIncome

116 1,247 173 148

1,300 187 133

1,254 208 149

1,304

1,187

-

248

179

-

184

138

-

1,415

1,400

1,449

-

218

247

315

-

157

176

236

-

1,238 1931,117 152 113821161,030 144

(*) – BTG is revising UBS´s Projections(*) – BTG is revising UBS´s Projections

1,336 229 188

1,370 236 181

Capitalization and Market Data

26

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

R$ Million 06/30/09

Shareholders Equity

Debt

460.6

(8.1)

Net Cash 215.6

Stock Price (Sep - 30, 2009): R$20.41 / share

Number of Shares: 78.6 million

Market Cap: R$1.6 Billion

Enterprise Value: R$1.4 Billion

Daily Volume (3-month average): R$1.8 million

Free Float: 27%Market Data


Brazilian Investors

5%

US Investors 37%

European Investors

42%

Other Foreign

Investors 16%

IR Contacts and Disclaimer

27

Visit our website: www.estacioparticipacoes.com

Investor Relations Team:

Lorival Luz – CFO

Daniella Guanabara – [email protected]

Fernando Santino – [email protected]

e-mail: [email protected]

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

Fax: (55) 21 3311 9676

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 finance Estácio Participações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performance of 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 are our interests in SESES, STB, SESPA, SESCE, SESPE and IREP, and we currently hold 99.9% of the capital stock of each of these subsidiaries. Considering that the Company was incorporated on March 31 2007, the information presented herein is for comparison purposes only, on a proforma unaudited basis, 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 order to 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 rules applied to the remaining subsidiaries, except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparison purposes should not be considered as a basis for calculation of dividends, taxes or for any other corporate purposes.

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