international students – Page 3 – View From A Bridge – management, education and personal thoughts

THE’s Russian Ranking Reprise

Despite a year of slaughter, destruction and probable war crimes in Ukraine the Times Higher Education (THE) continues to turn its eyes away from the obvious step of excluding the names of Russian universities from its rankings. As the drumbeat starts for the launch of the 2023 Impact Rankings at the end of May 2023, the THE has already announced that Russia will again have the most institutions taking part. We are also told that they are “expecting data to come from a single academic year: 2021” so there would appear to be no chance of revulsion at an institution’s support for unprovoked war, deaths and a refugee crisis impacting on its ranking.

The Sustainable Development Goals are a decent and positive attempt to build a better world and universities are right to consider how they might play a part in that endeavour. This makes it particularly unfortunate that the THE Impact Rankings have ignored the underlying principles to give continued encouragement to institutions that have backed Putin’s war. There is even more to suggest how this distorted world view undermines the credibility of the rankings and the organization.

Indifference and Inaction

The THE Chief Executive Office expressed “solidarity with Ukranian people” on behalf of the company in March 2022 and claimed “we will allow the rankings to do what they are designed to do, and show the world the impact of those [Russian government] decisions..”. He conveniently forgot to mention that it would be years before the rankings reflected the impact of the war and may even have hoped, in best WW1 jingoistic fashion, that it would all be over by Christmas. Imagine if every other business, Government and individual that has supported Ukraine through resources, funding, boycotts or direct action, had decided it would wait more than two years before doing anything.

He went on to say that “..we will of course keep the situation under constant review, and will not hesitate to take further steps if we believe it is necessary to do so.” As far as one can see there has been no further action, no further statements and no further interest despite more than a year of bloodshed and atrocities. In that respect, the Impact Rankings have become a monument to the indifference of the THE’s leadership.

Lack of Transparency

Even the THE doesn’t seem able to stomach the notion of Russian universities parading their credentials on SDG 16 – Peace, Justice and Strong Social Institutions. It is difficult to see any other reason that they would blank the scores for this SDG in the rankings of Russian institutions. However, there is no explanation in the methodology as to whether there is still a score counting towards the overall ranking of the institution, whether it is zeroed or if there is some other fix.

When a senior data scientist at the THE was asked to explain the methodology no response was received¹. It’s not a very good look given claims about the openness and integrity of the rankings. But it should be a timely reminder to every participant that the methodology is subject to the whims of the compilers.

Allowing Brand Endorsement

Meanwhile, Russian universities remain entirely content to maximise the publicity they get from featuring in the rankings. For example, Altai State University features their ranking, complete with blanked out boxes on SDG 16, as part of their marketing. Their corporate statement reflects glowingly on what they position as “the third nomination, in which the university was awarded, was…Goal No. 16.”

It seems beyond belief that the THE cannot see that its logo, rankings and reputation are being used as an endorsement for Russian universities. Neither do they seem to realize that league table endorsement is exactly what the Russian government requires of the institutions. The minimal efforts made by the THE to reduce these bragging rights have manifestly failed and allows Putin’s regime to claim a semblance of normality and acceptance in the world university community.

Promoting Russia as a Study Destination

The THE continues to actively promote Russian universities, allowing easy and searchable access to university courses to 457 courses in the Russian Federation. Courses from HSE University (shown here) are also publicized, along with many other Russian universities, by Studyportals who act as a THE partner and facilitator in exploiting student eyes on league tables. It is difficult to see that this is not contributing to Russia’s continued success in attracting international students.

Hapless, Hopeless or Worse

It seems reasonable to accept the Ukranian group Progresylni taking any opportunity to understand how they can raise the profile of Ukraine and its fight for academic survival. We should all feel humbled by their willingness to look forward while facing a devastating attack on their country. The uncomfortable truth is that the THE’s unwillingness to act means that the names of Ukranian institutions in the rankings continue to stand next to those from an invading power which continues to build a reputation for crushing academic freedom.

In the Impact Rankings Ukranian institutions are outnumbered by around three Russian universities to one Ukranian which, according to Statista, makes the ratio slightly better than the advantage that Russia has in active soldiers. With a single decision the THE could allow Ukrainians to enjoy the rankings without the presence of the aggressors. A reformulation of a line from David Sedaris might suggest that these are circumstances where humbled can be found between hapless and hypocrisy in the dictionary.

Keeping Bad Company

Nobody really expects the THE to give up on the money-go-round that is the university rankings and they may have already anticipated an end game in the war. It could come down to a calculation of the odds on who prevails or who will have the most university buildings left standing in the long-term. The needs of private investors and owners, Inflexion, may also make it seem important to keep the doors to revenue open for all possibilities.

What we do know is that the Impact Rankings are manipulable and there is an emerging consistency about those who most want to be involved. The top three countries involved in 2023 will be Russia (92), Japan (91) and Turkey (84) with two sharing the distinction of having a so called “hard man” at the top and all three being in the bottom 40% of the Academic Freedom Index. In the 2022 Impact Rank the five countries with the most entries – Russia (94), Japan (76), Pakistan (63), India (61) and Turkey (57) – were all in the bottom 40% of the Index.

In Turkey (which is in the bottom 10% of the Index), President Erdogan signed a decree that allowed him to appoint a president to any university in the country and did so at Bogazici University which he claimed, “failed to understand and incorporate itself to the nation’s values.” He appointed Melih Bulu as president and while protests erupted and students were arrested “Bulu kept repeating his main promise of improving Bogazici’s international university ranking…”. While Bulu was eventually removed² it suggests how pernicious the rankings can be in creating a lever for politicians to ride roughshod over academic freedom.

Even in countries considered to be relatively liberal democracies the rankings have become a dumbed down touchstone for awarding visas in a way that is both vapid and discriminatory. It is not too far-fetched to believe that rankings are already a vanity project for every wannabe dictator or authoritarian government that wants credibility on the world stage and are becoming a simplistic measure for politicians to judge value in higher education. It is, after all, much easier to expect universities to manipulate their rankings submission, than to allow academics and students to build a liberal, challenging community where governments are critiqued and challenged.

NOTES

The individual had been openly looking at my LinkedIn profile. After the message was sent they disappeared from view on my account. Strange behaviour.
Before cheering the demise of Melih Bulu it’s worth noting that Professor Mehmet Naci Inci was appointed (by Erdogan) despite the opposition of 95% of the institution’s academics. In January 2022 he removed three deans of school for their part in protests then in August 2022 he suspended 16 academics who protested “..against presidentially appointed rectors at the school..”. In February 2023 an Istanbul court sentenced 14 Boğaziçi University students each to six months in prison for staging a protest over his appointment.

Image by Andrew Martin from Pixabay

INTO The Interim

Back in June 2021, INTO University Partnerships (INTO) appointed Olivia Streatfeild as its first woman CEO, and in June 2022 she became the first woman Director. There were plenty of strategic decisions to make as the world struggled out of a debilitating pandemic and INTO reflected on a five-year period when it had lost six joint ventures and struggled to maintain enrollment volumes. Just two years later agents have been briefed that long-term Andrew Colin lieutenant, John Sykes, is stepping in as Interim CEO.

As well as being a main board director and a “co-founder”, Sykes has been part of the operational, decision-making Executive Team throughout the last decade. While the presumption might be that this will mean continuity it will be interesting to see how many of the Streatfield decisions stick. Here are some other issues that might need attention.

Beware the Fog On the Tyne

INTO’s engagement with Newcastle University has had its shares of ups and downs. Since 2016 the average number of students enrolled in the INTO Newcastle center has varied from 1142 in the best year down to 627 in 2021/22. The fluctuation in Operating Profit reflects the sensitivity to student enrollment.

NB: The Operating Profit excludes significant exceptional items in 2016, 2017 and 2018. The 2019 and 2021 figures are as adjusted in the INTO Newcastle University LLP Annual Report.

In 2021 the LLP’s Annual Report noted that the joint venture based in Newcastle has moved to majority ownership of 51% by INTO. The joint venture launched in London in 2015 as INTO Newcastle London and long term readers will know the shifting sands of the INTO operation in Middlesex Street, including the links with Josef Mifsud whose whereabouts remain unknown. INTO Newcastle London came under the sole control of Newcastle University in late 2020 and while the changes in controlling party mean any intercompany transactions are no longer reported by INTO, we do know that in 2020 the JV was a indebted to INTO to the tune of £5.4m.

A small sideshow is that Newcastle University awarded a year-long contract starting in January 2023 for ‘The Provision of International Market Research and Business Development – USA’ including ‘in-country liaison, advice and marketing activity to support the University’s strategies.’ Perhaps surprisingly this was not entrusted to INTO’s US team but to Foothold America Inc. To be fair Newcastle had already been awarded two contracts to INTO worth around £1m, starting August 2022 and November 2022, for similar work over three years in South/South-East Asia and China respectively.

Magic Kingdom or Repo Man

The US was once seen as the land of opportunity for pathway operators but it’s become increasingly harder work and INTO’s exposure is second only to Shorelight. The legal battle between INTO and USF is likely to be disruptive, time consuming and expensive and it continues with the next hearing scheduled for 10 May and a new round of discussions with a mediator to come. All the while, legal arguments are being made about the extent to which the USF Directors may or may not have been in breach of their fiduciary duty to the joint venture.

If that’s not enough of a headache, 2023 has seen the end of the joint venture with Illinois State University added to the closures at Colorado State University (2021), Marshall University (2020) and Washington State University (2022). The operation at St Louis University became wholly owned by INTO in 2021 and despite added firepower on the business development side in the US there does not appear to have been much progress in adding many new partners – either joint venture or direct recruitment. Meanwhile, the enrollment decline in continuing operations at flagship joint ventures like Oregon State University are evident.

Source: Oregon State University Office of Institutional Research

The company’s own research suggests that only 34% of China, HK and Macau agents surveyed think they will send more students to the US in the coming year which, by implication, means 66% will send the same or fewer. The struggles of the last few years have also seen US joint ventures stacking up increasing levels of debt to INTO with every single US joint venture showing higher debt than the year before in the 2022 Annual Report. It is difficult to see the way forward.

Happy Mondays or The Fall as Manchester Decides

In July 2019 the University of Manchester awarded a five-year contract to INTO’s wholly owned Manchester operation for “Managed Service Provision of Pre-Degree Programmes for International Students”. It has probably been a significant driver of the INTO Manchester performance over the years and 2021/22 saw the operation roar back to achieve record recruitment and profit. The contract was for 300k and the contract period ends in July 2024.

Alongside that is the tender for an embedded study center with recruitment opportunity with Manchester Metropolitan University (MMU) which is currently a partner of INTO Manchester. It’s arguable that over the years MMU has done less well in terms of international enrollment than the popularity of the city suggests it should. Both Kaplan (at Liverpool) and Navitas (at Swansea) have shown their willingness to become involved in capital projects as joint ventures so competition for the business could be hot.

If another provider wins either the University of Manchester business when it becomes due or the Manchester Metropolitan tender the consequences could be serious. If it all goes wrong for INTO, the office by the Brighton seaside might echo to Morrissey lyrics like ‘Hide on the promenade, etch a postcard/’How I dearly wish I was not here.’

UK OK OR KO?

It looks like recruitment numbers are perking up in the UK but recovery is patchy with INTO UEA looking to be on life support as the university and the joint venture struggle with competitive realities. While INTO University of Exeter enrollments withstood the pandemic reasonably well there has been little evidence of recovery in the recently released 2021/22 Annual Reports of joint ventures with Stirling, Queen’s or City . While the HE sector in the UK has seen record international student recruitment over the past two years it does not seem to be feeding into pathway numbers.

Source: Joint/Venture Wholly Owned Annual Reports and INTO University Partnerships Annual Reports (NB: INTO UEA does not report for 2021/22 until July 2023. For that reason the 2022 Total enrollment shown excludes the JV and is not wholly comparable with previous years.)

With Australia re-asserting its competitiveness, the US open for recruitment, Canada thriving and some evidence that increasing numbers of Chinese students are looking elsewhere for higher education it’s unlikely to get any easier. INTO’s recent win at Lancaster University was good news for them but the QAA reports indicate that in 2018 it only had around 280 students and sector feedback is that Study Group found it hard going. Whatever happens, the UK situation carries plenty of risks.

Sticking to the Knitting and Counting the Beans

The Interim CEO may want to look at some ratios and data from the INTO University Partnerships Limited Annual Reports available at Companies House. The first confirms that the US contribution to turnover reflects the decline of the business. Whether it can or will come back is an open question but I doubt it’s something to bet the house on.

A second issue worth thinking about is that data on staff attributed to the Group makes interesting reading. Group staff costs in 2021/22 were more than 50% of turnover while in 2018/19 they were only around 38%. It is possible that the categories have some underlying nuances and there have been job cuts in recent months but it seems a good starting point for operational efficiencies.

Finally, in 2020/21 the number of employees earning over £100k a year was 40 while in 2021/22 it had grown to 48 – that’s 20%. The number earning over £275k was four compared to one the year before. For a business with revenue that was lower than 2019/20 that needs some unpacking.

The Big One

Perhaps the biggest strategic question is about the future ownership of the business and how quickly Leeds Equity would welcome some return on the £66m investment they made a decade ago. The appointment of two relatively high-profile non-executives to the Board might suggest some intention to seek new external investment. It’s also possible that Andrew Colin could take the business back into 100% sole control.

The final intriguing possibility, given the volatility and possible consolidation in the sector, is that this could be the moment where the business is sold. Back in 2018 there were widespread reports that the business was up for sale with a price tag of £300m and in a sector full of rumours there have been unconfirmed suggestions that Navitas was showing interest shortly before the pandemic. Taking on Lancaster, getting Manchester right and sorting out Newcastle would certainly strengthen the hand in any negotiation.

NOTES

Links are provided to publicly available information where possible. Speculation and rumour are noted as such. As always, the author would be happy to receive authoritative clarification on any specific points and will note any amendments.

Just some small notes on a few of the sub-headings:

1. Fog on the Tyne is a 1971 album and a single by Lindisfarne. Footballer Paul Gascoigne provided vocals on a reworked single version that got to number two in the charts in 1990.

2. Magic Kingdom is a theme park at Walt Disney World where “fantasy reigns” while Repo Man is a 1984 film with a strong underlying commentary about the “last defense of capitalism” and “no sense of purpose”

3. The Happy Mondays and The Fall are Manchester bands. The Happy Mondays were part of the Madchester sound of the 1980s and were named for the day their unemployment benefits arrived – “the day for getting off your face” as bassist Paul Ryder explained. With 31 studio albums in 40 years (1979 to 2017) The Fall gloried in DJ John Peel’s description “they are always different; they are always the same.”

Image by Gerd Altmann from Pixabay

More JAWS for INTO and USF

Sequels are rarely as good as the original but after a new hope with previous reports of dispute resolution between University of South Florida (USF)¹ and INTO University Partnerships (INTO)¹ we may have reached a point where the empire strikes back. For new readers, USF gave notice to voluntarily dismiss its case against defendants INTO on 3 January 2023, on the basis that the defendants were “taking the actions that the Financing Corporation’s declaratory judgment lawsuit sought.”²This followed a hearing on 16 December 2022 where USF’s motion for the appointment of a Receiver for INTO USF, INC had been heard. Eventually, on 13 February 2023, Circuit Judge Darren D. Farfante declined “USF Plaintiffs’ Motion for Appointment of a Receiver.”³but the case has been reopened.

The following commentary attempts to outline progress and indicate key issues with reference to the publicly available filings. These are complex issues and readers looking for a more complete understanding should access the Court records. I make no attempt to comment on the merits of either case and welcome authoritative comments and amendment.

Just When You Thought It Was Safe to Go Back in the Water

Even before the motion was declined USF had sought “..an order finding that the Financing Corporation is the prevailing party in its request for declaratory relief…..and is therefore entitled to attorney’s fees and costs, to be paid by Defendants…”⁴

The same day, INTO USF, Inc. and INTO USF LP filed to “…respectfully request that the Court (i) declare the INTO Parties as the prevailing parties in the declaratory judgment action, and (ii) hold in abeyance determination of the amount of fees and costs owed until the remaining claims between the parties are resolved.”⁵

There have been further filings on the matter on both the side of USF^6,8 and that of the INTO parties^7,9. There is a good amount of legal argument but for the lay person the choice phrases include assertions like, “a pyrrhic victory”⁶, “completely ignores both Florida case law and the facts of this case”⁷, “..hoisted by their own petard”⁸, and “..premised entirely on a sleight-of-hand”⁹. It’s all good knockabout stuff but one wonders how much lawyerly time and client money is going into this.

The case then became an SRS Reopen Event on 16 February 2023.¹⁴ It appears that the “prevailing” party “..in the Declaratory Judgment Action (Doc #97) and Plaintiff’s Motion to Determine Entitlement to Prevailing Party Attorneys’ Fees and Costs (Doc #98)” will now be the subject of a Zoom hearing on May 10, 2023 at 2.30pm¹³

While this has been going on there have been developments in INTO’s claims of breach of fiduciary duty against the Jennifer Condon, Karen Holbrook, Nick Trivunovich, and Ralph Wilcox (collectively known in the case filings as the “FC Directors”). In summary, INTO argue that they “…served as directors of INTO USF, Inc and owed it fiduciary duties, simultaneously served in positions for USF and prioritized the interests of USF over the interests of the Company in seeking its wind-down and termination.”¹⁶

This had originally been included as Count V of INTO’s complaint but had been challenged on several grounds including that the individuals had sovereign immunity by dint of carrying out their duties as a result of being employees of USF. In a motion to dismiss this aspect of INTO’s case the filing noted “Section 768.28(9) protects state employees for torts committed within the scope of their employment.” and that “All the actions the FC Directors took that allegedly breached their fiduciary duty occurred while USF employed them.”¹¹ The judge found in favor of this argument but while, “As pled, sovereign immunity bars Count V against the FC Directors” the Plaintiffs (INTO) were “..given leave to amend Count V of the Amended Complaint against the FC Directors.⁹

The opportunity to make such an amendment was taken in the Second Amended Complaint¹⁰. Where Count V alleging “Breach of Fiduciary Duty Against the Former USFFC-Designated Joint Venture Directors” has been re-drafted. There are several amendments but an example that indicates the tone says, “The Former USFFC-Designated Joint Venture Directors were appointed to the Board, and took on these fiduciary responsibilities to the Joint Venture, independent of the duties and responsibilities they owed to USF by the nature of their employment.”

The deadline for the defendants to respond to the Second Amended Complaint was originally 9 March 2023 but an extension to 20 March 2023 was granted without any opposition.¹²There seems little doubt that this falls into thecategory of….to be continued.

Land of Lincoln Loss

All this comes as market reports suggest that the joint venture between INTO and Illinois State University (ISU) has come to an end with a direct recruitment arrangement remaining.¹⁷ The joint venture was formed in March 2018 and as of “June 30, 2022 and 2021, the Company had an accumulated deficit of $12,155,144 and $11,806,337, respectively.” according to the financial statements and reports. It becomes the sixth of INTO’s eleven US joint ventures to close since 2020 (including INTO St Louis which is now 100% owned by INTO).

Perhaps interestingly, ISU’s international student population (non-US citizen in student enrollment reports) appears to have climbed quickly over the past five years going from 511 to 736 from Fall 2018 to Fall 2022. However, the significant change is year on year from 2021 (557 enrolled) to 2022 (736 enrolled) with the growth entirely made up of graduate students. Meanwhile, non-degree seeking international students (the usual location of pathway numbers in US university enrollment data) fell from 44 in Fall 2018 to 14 in Fall 2022.

It seems possible that ISU has been able to benefit from the more widespread growth in graduate students from south-east Asia but that this has not flowed through in any meaningful way to the pathway operation. That would reflect the situation seen at some other pathway Centers in INTO’s US portfolio. It remains to be seen how other joint venture partners reflect on the situation as Fall 2023 comes into sharp focus.

NOTES

The case in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida Circuit Civil Division is formally between USF Financing Corporation (plaintiffs) and INTO USF LP and INTO USF, INC (defendants). The terms USF and INTO are used in this blog for brevity. The Consolidated Lead Case is 22-CA-006001, Div. L. and filings referenced below relate to this case. (Joint Case Management Report – Filing # 162471158 E-Filed 12/06/2022 12:51:36 PM¹⁶)
Filing # 163938884 E-Filed 01/03/2023 09:29:50 AM
02/13/2023 11:22:52 AM Electronically Filed: Hillsborough County/13th Judicial Circuit.
Filing # 166039948 E-Filed 02/02/2023 05:03:54 PM
Filing # 166035151 E-Filed 02/02/2023 04:30:42 PM
Filing # 166713446 E-Filed 02/13/2023 05:30:56 PM
Filing # 166710887 E-Filed 02/13/2023 05:03:58 PM
Filing # 167161634 E-Filed 02/20/2023 04:55:28 PM
Filing # 167148563 E-Filed 02/20/2023 03:16:05 PM
02/14/2023 01:11:28 PM Electronically Filed: Hillsborough County/13th Judicial Circuit.
Filing # 167652717 E-Filed 02/27/2023 07:53:06 PM
Filing # 162259450 E-Filed 12/02/2022 11:01:26 AM
03/08/2023 06:38:01 AM Electronically Filed: Hillsborough County/13th Judicial Circuit.
Filing # 168483841 E-Filed 03/10/2023 01:09:08 PM
Reopen event: A reopen event occurs when a motion, pleading or other recordable action occurs on a case that requires additional court activity after a disposition event has closed the case for court activity. Note that a reopen event involves at least one action and that additional post-judgment actions may occur before the case is reclosed.
Filing # 162471158 E-Filed 12/06/2022 12:51:36 PM
It is reasonable to note that both INTO and ISU appear to show INTO pathway courses on their websites. Any update from either party is welcome.

Image by Mote Oo Education from Pixabay

Fade Away or Speculate

With businesses being sold, some chances of consolidation and some new information being available it seems a good moment to have a look at the fortunes of the major pathway businesses. There is also the chance to speculate on how the future might look for some of them. It’s all by way of a contribution to the thinking in the higher education sector and the author, as always, is happy to have authoritative responses that bring clarity, correction or corroboration.

Shorelight

As reported in July 2022, Shorelight seems to be all in on developing an aggregator-style approach to direct recruitment partnerships. It looks as if another flagship Pathway partnership has been lost with the University of Mississippi no longer featuring on the website at all. The partnership was launched in September 2018 with Shorelight CEO, Tom Dretler, saying “Our programs would not be thriving as they are today without our partnerships with top-tier universities like Ole Miss that provide international students with access to high-demand degree programs.” Maybe they’ll miss Ole Miss…

It’s difficult to say with certainty how well the direct recruitment business is doing or how financially rewarding it is. An investment-oriented perspective comes from Huron Consulting Group who took a $27.9m stake in Shorelight during 2014 and 2015, which rose to $40.9m in 2020. The original maturity date for the early investment was 2020 which was pushed out to 2024 when the additional investment was made.

The Huron Consulting Group Inc. annual report for the year ending December 2022 shows that the maturity date has been pushed out to 2027 which suggest they are not expecting it to be repaid any time soon. Other news from the filing was that the “fair value” of the holding was reduced year on year from $65.9m to $57.6m. Tracking the percentage difference between the investment holding and the “fair value” suggests that after a peak in 2018 it’s been pretty much downhill ever since.

INTO University Partnerships

It’s difficult to know where to start with INTO but there is a sense of something in the air. The public spat with the University of South Florida¹ appears to have seen the legal arguments reopened² with a continuing pursuit of individuals from the University for Breach of Fiduciary Duty³. More recently the company’s first ever partner, the University of East Anglia in the UK, has seen its vice-chancellor resign and a suggestion that the joint venture won’t be returning profits for distribution until 2029/30.

A single outpost in Australia seems bound to come under pressure from the super-dominance of Navitas after their purchase of Study Group’s interests in Australia and New Zealand. Study Group’s retrenchment and the potential for a strong competitor emerging if Oxford International Education Group succeeds in a bid for Cambridge Education Group could bring increased pressure on the pathway business in the UK. There seems to have been no progress in new business development in the US and the partners there show little sign of a post-pandemic boom.

All this comes after an upweighting of the INTO Group Board with two senior directors in Annalisa Gigante and Tamsin Todd and the addition of Nick Adlam whose LinkedIn profile indicates he also works for Andrew Colin’s Espalier Ventures Limited⁴. It is not uncommon for companies to strengthen their board before looking for new investment or possibly to secure a public listing of some sort. Perhaps the Alternative Investment Market, once described as a ‘casino’ by Roel Campos of the US Securities and Exchange Commission is a route.

It’s pure speculation (no pun intended) but an IPO for a part share of the business could offer Leeds Equity an exit while bringing some new cash for INTO to revitalise its business. It’s the sort of audacious move that might appeal to the company’s lead shareholder. AIM also seems to offer the flexibility on governance and regulation as well as the access to capital that might be appealing.⁵

Study Group

Amid all the talk of it being “consistent with the strategies of both companies” it was difficult not to believe that Study Group’s sale of its Australia and New Zealand operations to Navitas was that of a company in needs of cash. We know from Study Group’s 2021 annual report that covenants on its term loan debt were set aside until 2024 and that Ardian provided a capital injection of £40m in February 2022 on top of an investment of £17m in February 2021. Adjusted EBITDA of £14.4m was down from £25m year on year.

All that is on top of the loss of Lancaster University which comes just a few years after Leicester University jumped ship to Navitas back in 2019 and suggestions that CEG has been more successful when competing for high ranked university partners in recent years. The signing of Teesside University in the UK in 2021 was a bright spot but the logic of picking up a direct recruitment partnership with Florida Atlantic University, which split with Navitas in 2019, seems strange given recent history in the US. The business in the Netherlands has also been closed as a result of “changes in international student recruitment regulations”.

Insendi is sometimes touted as the brightest star in the Study Group playbook and of 54 university partners on the company website at least 21 are with the online platform only. There is no doubt that it has had some decent names with elements of Imperial College and Johns Hopkins on the roster. But given the ongoing pressures on OPMs and reports of a “rocky time” in the sector the future seems less than certain.

CEG, QA Higher Education and Oxford International Education Group

The “for sale” sign has gone up around CEG and there were suggestions in 2022 that QA Higher Education might also be up for grabs. It has been flagged that Oxford International Education Group may well be in the hunt and winning CEG would take them to 13 pathways in the UK but a further prize would be the ten online CEG partners. While CEG has been successful in securing new university partners in recent years there have been suggestions that the commercial terms require very strong recruitment to be sustainable, so any deterioration in UK visa conditions could make life difficult.⁶

News around QA Higher Education has been more muted and the recent appointment of a new COO, Kit Tse, who held a similar role at Oxford International Education Group, might suggest that they are in it for the longer haul. The real question, if so, might be whether there is scope for significant future growth in the UK when universities without commercial pathway partners are finding recruitment fairly straightforward.

Kaplan

The good ship Kaplan seems to sail steadily on its way while others roll, pitch and yaw in choppy seas. The Annual Report and Financial Statements suggest a relatively untroubled (or at least well managed) COVID period with revenue rising from £116.5 in 2019 to £133m in 2021 and profit going from £7.2m to £12m. It’s a solid portfolio with something for everyone but there may be a moment in a later blog to have a look at each of the underlying pathways to see who may not be doing so well.

Summary

The scope for consolidation in the sector seems to be clear but the froth and excitement created by record-breaking enrollments in the UK and a bounce-back in the US could also tempt unwary investors to enter the market. They may want to cast their minds back to the period in the early 2010s when over a billion dollars was invested in pathway on the back of a belief that the US was the new El Dorado. Parthenon Group’s statement that, “We anticipate that growth will be constrained only by the pace at which private providers can develop the market” did not age well.

Global competition continues to increase, source markets continue to evolve and the uncertainties of Government policy continue to be an existential threat to any expansion ambitions. Anyone who has brought two businesses together will also tell you that for every synergy there is a clash of ego and culture while for every opportunity there is a bedevilling and unforeseen challenge. It all makes for a moment when operators probably have to choose to step back and fade away or show the appetite for risk and speculation.

NOTES

This has been extensively covered in previous blogs (starting August 2022) with the lead case being closed in January 2023. Court Filings indicate it was reopened on 16 February 2023. A future blog will look at the circumstances and any continuing action.
SRS Reopen Event shown at the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida Complex Business Litigation Division.
Filing # 167652717 E-Filed 02/27/2023 07:53:06 PM in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida Complex Business Litigation Division
Espalier Ventures is 100% owned by Andrew Colin with INTO University Partnerships Limited making up 99% of its turnover.
It is only fair to say that in 2015 Marcus Stuttard, head of AIM, reflected that, “If AIM was just a casino it wouldn’t have lasted 20 years.” The obvious riposte might have been that the oldest licensed casino in Nevada turned 90 in 2021 because there will always be gamblers!
This is a summary of discussions with third-parties and there is no direct evidence that terms are more onerous than some others in the sector. The general point is that universities are more experienced in understanding pathways and are likely to be more demanding given the number of pathway options available.

UK International Enrolments Unchained

The latest HESA figures (released 31 January 2023) give a further instalment and insight on the extraordinary recent changes in global student mobility and the impact on UK universities. As predicted in early 2020 the growth of India as a market, largely encouraged by a more welcoming post-study work situation, has substantially altered the landscape. This blog takes a look at other significant changes, a snapshot of key countries and who the winners and losers are in the enrollment stakes. The focus is on full-time students¹ and there are a few words of caution at the end.

Overview

After a few relatively flat years the period from 2018/19 to 2021/22 has seen a CAGR of 17.39% in enrolment of full-time, non-EU international students. Part-time, non-EU international students have grown by a CAGR of 10.44% from a much lower base. While part-time changes are interesting the focus here remains on full-time numbers.

The first and most obvious thing about the mix of students is that Postgraduate Taught numbers have accelerated rapidly and particularly so from 2020/21 to 2021/22. The total number of postgraduates is up 117% over the period with the total number of undergraduates up 26%. A strong performance but always with the risk that postgraduates usually only come for a single year and as global competition increases may look elsewhere.

It is no surprise to anyone to see that India has been the dominant driver of the change. But both “Other Asia” and “Nigeria” enrolments have increased by more than China since 2018/19.

NB: This chart has not been disaggregated for Full and Part-time. Increases in part-time students are relatively modest over the period.

“Other Asia” is worth disaggregating and the chart below shows the change in enrolments over the past four years in the countries with the highest number of students in the UK. Most noticeable in volume terms is the year-on-year growth from Bangladesh and Pakistan. 68% of full-time students from Bangladesh and 67% from Pakistan are postgraduate taught compared to 80% of those from both India and Nigeria. By contrast 52.6% of full-time Chinese students and just 17% of Hong Kong students are postgraduate taught.

Country By Country Review

The countries to follow for volume growth are clearly India, Nigeria, Pakistan and Bangladesh and at each individual country level the march of the non-Russell Group universities goes on. This section focuses on the year-on-year growth from selected countries.

India

Coventry added 2,900 full time enrolments from India year-on-year and now stands only behind the University of Hertfordshire in terms of the largest Indian contingent in the UK. Nearly half the year-on-year total increase from India for the UK came in the ten universities with the most significant change in enrolments.

There are also some interesting shifts within universities in terms of their balance of students. As shown in the table below, the universities of Leicester and Brunel are in the top ten for increases in students from India (but are among the biggest losers from China). Roehampton University’s year on year growth of 332.9% is quite startling. The Russell Group universities have not been totally out of the picture with Glasgow, Manchester and Warwick all managing to add 1,000 or more Indian students year on year.

There may also be a word of warning due for institutions growing their numbers from India and relying on the increased volume being sustainable. Five universities lost over 20% of their Indian enrolments year-on-year in 2021/22. The University of Wolverhampton may offer a salutary tale with a rollercoaster ride from 85 in 2018/19 to 1360 in 2020/21 but a decline in 2021/22 to below its level of 840 in 2019/20. Any failure to offset that from other countries could be a serious financial hit.

Nigeria

The table for Nigeria shows the top six gainers to include the University of Hull’s extraordinary increase of 1207%, while of the 915 there are 870 postgraduate taught. The University of Hertfordshire has the largest number of Nigerian student enrolments in the UK and of the total 1,915 (83.8%) are postgraduate taught. The best Russell Group performance was the University of Glasgow which increased by 60 students to 170.

Pakistan

The growth in enrolments from Pakistan is generally more widely spread, although non-Russell Group universities dominated recruitment from the market. Queen Mary University of London was the best performing Russell Group university with an increase of 30 year-on-year. The University of Hertfordshire performance puts it in the top five in terms of volume growth for each of Nigeria, Pakistan and Bangladesh and in the top ten for India. If there were an overall league table they would probably lead on points.

Bangladesh

The University of Hertfordshire also features strongly in Bangladesh where it’s year on year growth put it in the top five. Further down the rankings there are some significant percentage increases but from lower bases with De Montfort, for example, increasing from 50 to 390 and Cardiff Metropolitan going from 30 to 325. Queen Mary University of London is the best placed Russell Group university with, um, 80.

China

The exception to the general rule continues to be China where the two Russell Group universities in Scotland are showing substantial growth. University of the Arts is possibly the surprise packet in the top five for growth and other notable growth in a field dominated by the Russell Group institutions was shown by Goldsmiths College (470) and Kingston University (515).

As noted in previous blogs, however, the strong recruitment performance in China is not universal for the Russell Group. The universities with the greatest year on year reduction in Chinese students are Liverpool and Newcastle with Queen’s University Belfast and Cardiff doing well below par for the sector. In the context of their performance in India (as discussed above) it would be interesting to know if the universities of Leicester and Brunel have changed strategy because of opportunity or an inability to compete with brand sensitive students from China.

Summary and Thoughts

Taken in conjunction with previously reported trends in enrolment from 2018/19 to 2021/22 it is clear that the changes in growth markets have presented significant enrolment and financial opportunities for universities who may have struggled to recruit heavily in China. There seems little doubt that while there is a benevolent, post-study work visa regime, universities in the UK will be able to continue making progress in India, Bangladesh, Pakistan and Nigeria. Whether Russell Group institutions sharpen up their strategies or choose to wait (possibly hope) for a return of Chinese students remains to be seen.

What is also in the mix is whether the enrolment trend is driven solely by successful institutions offering some mix of low cost (both tuition and accommodation), sympathetic local culture, lower entry criteria and dynamic recruitment tactics. The disparity in volume growth between Russell Group institutions and many well ranked universities such as Surrey, Loughborough, Bath and Lancaster seems extreme. Perhaps some institutions need to look harder at their international office strategies.

It is noticeable that of the top 40 universities in the 2023 Complete University Guide only the University of Leicester (29^th) makes an impression among the best recruiters from India. This may be another sign that students are largely ignoring rankings and pursuing a degree in a country where they will have the option to work during and after study. These are features that are more about Government policy than university excellence.

There are, of course, other implications for the scale of growth being seen. It is noticeable that the University of Bradford has closed applications to some courses for 2023 and that Oxford Brookes and the University of Salford have also made adjustments to constrain the number of applications being received from certain countries. It is almost certain that other universities will be doing the same.

Beyond that are the financial implications. The University of Hertfordshire is in the top five gainers for the four biggest growth markets and this is reflected in the percentage of income arising from international tuition fees. From just 11.6% of total income in 2018/19 the fees are now worth 31.9% of total income.

One must also consider how those with sudden increases, like the University of Hull with an increase of 1207% in its students from Nigeria, will manage the student experience. In 2020/21 Nigerian students made up 3.8% of the university’s full time international population but in 2021/22 they will be 30.2% of the group. These are substantial shifts that require careful attention to maintain reputation and quality of academic performance.

Finally, there is the likelihood that growth will have continued into 2022 enrolments. With the majority of students now coming as postgraduates for one year and an increasing propensity to intend to stay after studying, the summer of 2023 is likely to see greater competition for graduate jobs than ever before. Whether the UK is ready to manage that opportunity successfully in the middle of a recession and with a Conservative Government planning its strategy for an election just 18 months away remains to be seen.

NOTES

The focus is on full-time students to avoid any distortion from individual universities doing significantly better with part-time students.

Image by Jan Alexander from Pixabay

PATHWAYS GREAT CONSOLIDATION?

Last week’s news that Oxford International Education Group (OIEG) is in the hunt for buying Cambridge Education Group (CEG) could be the first step in consolidation for the pathway sector. It comes after a few torrid years where aspirations for pathway growth in the US foundered and the pandemic wreaked havoc with global student mobility. Murmurs that QA Higher Education may also be on the block and long-standing speculation that Andrew Colin and/or Leeds Equity might seek options on their investment in INTO make for a potential realignment of interests.

On the face of it a trade sale for CEG has the advantage of reducing recruiter competition in a market where new entrants have been one factor in the growing cost of student acquisition. It would also make for a group that had some genuine clout with fifteen UK pathway partners¹ including a Russell Group name in the University of Southampton. Both have minor interests in the US and CEG bring European partners and a burgeoning digital business with ten partners listed.

In the UK² this would make it larger than Navitas (11), Kaplan (11) and INTO (6) and the same size as Study Group (who lost Coventry London in 2022 and where rumours suggest another possible defection in the north of England). It’s a point where you could see one of those players having a look at QA Higher Education who have seven university partners including four where they offer a pathway but six where they deliver an undergraduate degree programme in partnership with a university. The restructuring could even extend into consolidation of pathway operators with the aggregator and OPM markets.

From Strength or Weakness?

A recent comment on mergers and acquisitions suggested that “you can’t keep a good capitalist down and eventually greed will overcome fear.” Many investors have cash in hand after a year with little action and there are suggestions CEG is available for between £150m and £200m. The financial returns of the various elements of CEG and OIEG are not easy to divine from published information but one can either read or deduce a number of things:

Cambridge Education Group

The financials below come from the accounts of Camelot Topco, ultimate parent company of CEG³, for the year ended 31 August 2021.

ONCAMPUS revenue declined in 2021 to £39.6m due to the pandemic but was £54.4m in 2020. CEG Digital revenue increased to £12.1m in 2021 from £6.2m in 2020 (one would presume partly due to pandemic related online measures). Underlying EBITDA was £7.8m in 2020 but fell back to £3.2m in 2020 due to the pandemic. Across the two business there were around 4,000 students enrolled.

Oxford International Education Group

The financials below come from the accounts of Sparrowhawk 2 Limited, the holding company of OIEG⁴, for the year ended 31 August 2022. The comparative year on year numbers span the acquisition of the business in early 2021.

Overall turnover increased to £58.8m from £33.4m the previous year. This includes pathways, a separate English language business, operations in north America, IELTS testing and two businesses in India. It is possible to deduce that at least £14.5m of the £58.8m is not pathway related but the accounts state that pathway revenue had increased £11m year on year. The numbers indicate that the business made a small operating loss on the year (£0.9m) but it is stated that this masks an “underlying profit of £2,907k”. The business is forecast to “generate positive EBITDA” during the financial year to August 2023.

Without having CEG’s accounts for 2022 it is not possible to know what a comparative performance to August 2022 was but one would anticipate a rebound in pathway business aided by the addition of new partners. The business is also able to trumpet the addition of Loughborough University, who have been talking with potential pathway operators since at least 2007, as a partner in December 2022. All in all, it looks as if OIEG would be taking on a larger business with some substantial and complementary assets.

Caveat Emptor

CEG is able to tell a strong story on digital developments and a growing portfolio of well ranked partners which might make it a very attractive proposition. OIEG is an aspirational business which can point to partners that have done very well out of the growth in UK student recruitment with the University of Greenwich being one of the most significant beneficiaries of the growth in the Indian market. So, what could possibly go wrong…

Anyone looking at the UK government’s turbulent approach to international student recruitment would point to the continuing possibility of changes to visa policy as a Conservative Government prepares the ground for an election in no more than 24 months. Significant limitations on student family members (other than with PhD students) and constraints on post study work are two of the main ghosts at the feast. More severe limitations on lower-ranked universities and “poor quality courses” would be particularly damaging to both CEG and OIEG portfolios.

Alongside that is the sense that CEG might see a window of opportunity that means a race to the exit is the most sensible option in a market where several factors could compromise future performance. Examples include the evident resurgence of Australia as a competitor after several years of weakness, as well as the reality that Canada remains strong and the US seems to be concentrating on visa turnaround times in major growth markets. All that is before the revitalisation of China as an international student recruiter with eyes on Africa and India, which seems an inevitable consequence of its borders reopening after COVID.

Those who have been involved in mergers and acquisitions will also recognise the substantial risks involved in trying to merge business cultures, operational activities and brands. For pathway operators, even as they become increasingly involved in direct recruitment, there is the added challenge of a sales team trying to cope with a plethora of university brands in their bag and not doing justice to any of them. Smart universities will also have the potential for amendments to contracts if ownership changes and could choose to negotiate hard on revised targets and penalties for failure.

What seems likely is that consolidation will come sooner rather than later as some operators and investors head for the exit doors while the UK environment looks acceptable. The possibility of aggregators, online delivery and post study employment options coming into the mix are likely to make for an interesting year. Interesting times.

NOTES

This count includes seven OIEG partners and the eight listed in CEG’s ONCAMPUS brand.
This is likely to be contested territory but I have attempted to review those relationships which are on campus, joint ventures, and have a pathway element. Authoritative corrections are welcome.
The ultimate controlling partner is Bridgepoint Euro IV Fund managed by Bridgepoint Advisers Ltd. The interest was purchased in April 2013 for a reported £185m. In July 2019 reports indicated that Bridgepoint had sold the CATS Colleges division of CEG to Bright Scholar for a transaction value of £150m.
The ultimate controlling party is THI Holdings GmbH which acquired a majority stake in March 2021 in a deal which saw OIEG’s schools division sold to Nord Anglia Education.

Image by Pete Linforth from Pixabay

Reelin’ In the Years

Following yesterday’s blog it was helpful to see the HESA summary data for 2021/22 enrollments appearing. While this does not give a detailed analysis of recruitment by source country for each institution it provides the data to demonstrate that a number of non-Russell Group universities have been outperforming their, supposedly, illustrious competitors in international student recruitment for the past two years of published figures. The outperformance is on both a percentage growth and an absolute volume growth.

It seems a reasonable bet that this growth will have been driven by students from India and other countries where the importance of post-study work and lower costs of studying are major attractions. Lean and well managed universities that are used to scrapping for every student and every penny but do not carry expensive infrastructure costs, top ranked (and paid) professors, or any illusions about rankings being a measure of attractiveness are probably doing very well.

What’s Another Year¹

HESA data shows that the year 2021/22 saw the universities of Greenwich, Teeside and Hertfordshire top this list of 19 institutions for percentage growth in international enrollments year on year. The universities of Liverpool and Newcastle saw a decline in their enrollments. Given the success of Northumbria University (situated less than a mile from Newcastle University) and Teesside University it seems misguided to suggest, as the Times Higher Education has, that geography is a significant factor in this recruitment performance.

Note: Source HESA (non-Russell Group shown in red)

Golden Years²

Looking over a longer time span it can be seen that the difference in performance is even more stark. Over a two year period the universities of Ulster, Teesside, Greenwich and Hertfordshire have more than doubled their enrollment of international students. The Russell Group’s University of Southampton performance over this two year period less exciting than its year on year 2020/21 to 2021/22 growth but when HESA data at institution level becomes available it will be interesting to see whether their country recruitment strategy changed.

Note: Source HESA (non-Russell Group shown in red)

Percentages can, of course, be misleading and what matters most to tuition fee income is the absolute number of students paying fees – bums on seats in common parlance. Several Russell Group universities started with significant international enrollments so might be expected to have increased their number of students more rapidly even if the percentage is lower. However, even by this measure several non-Russell Group universities are outperforming the Russell Group institutions over the past two years.

Note: Source HESA (non-Russell Group shown in red)

Tomorrow Never Knows³

It is commonly accepted that the often-quoted experiment, where a frog is placed in a pan of water that is slowly heated and is so insensitive to small changes in the external environment that it fails to escape before being boiled, is apocryphal. The response of some universities to the changing environment suggests that the experiment might be taking place in real time with international student recruitment replacing the water. Both the University of Liverpool and Newcastle University have done poorly over the past two years but both seem to be ignoring the underlying problem.

In its 2020/21 Financial Statements, the University of Liverpool accounts for its decline in international student fee tuition income by saying that, “overseas student recruitment continues to be affected by the pandemic, and although the impact is reduced in 2021/22, we have not yet seen a return in overseas demand to pre-pandemic levels.” In and of itself the statement is true for Liverpool but clearly not so for many other universities. Later in the Statements it is noted that, “there is a particular exposure to international relations with China due to our Joint Venture, XJTLU” which raises obvious questions about a recruitment strategy that has not embraced the growth in students from other markets.

Newcastle University’s Integrated Annual Report makes the point that “..we are heavily dependent on international students to keep the business running” but seems to be living in an alternative reality when it claims “..we have had a successful year with regard to international student recruitment.” The University trumpets its league tables success for the year but fails to recognize that this is not what is driving the needs and expectations of students in the most rapidly growing markets. The tired excuse that “ongoing uncertainty caused by the pandemic saw a lower than expected international undergraduate intake” suggests the university is the victim of an uncontrollable situation at a point when Northumbria University, just a stone’s throw away, has added nearly 3,000 international students in just two years.

On the same note, the University of Southampton’s Financial Statements suggest that “strong league table performance is a good indicator of future student recruitment, especially internationally,”. This is unsurprising for an institution that has formed its strategy around moving forward in the league tables but the facts showing desultory performance from well ranked institutions in the Russell Group club don’t exactly support the assertion. Recent research suggests that 72% of GenZ students think the rankings less important than finding a university that gives them the right skills for their future.

It is always good advice to separate cause from correlation and to not be the apocryphal frog. A new twist on an old phrase might be that it is time these universities smelt the coffee and woke up. There is a new international recruitment dynamic and they need to pay attention.

Notes:

The headline is from the Steely Dan classic, Reelin’ In The Years, released in 1972, although my argument is that some Russell Group universities are reeling in terms of response to market changes than fishing effectively. For those interested in such things, the Wikipedia article on the band appears to avoid exploring the origin of the band’s name.

What’s Another Year is the Irish Eurovision song contest winner from 1980 when it was sung by Johnny Logan. Johnny Logan is the only performer to have won the Eurovision Song Contest twice, in 1980 and 1987. He also composed the winning song, Why Me?, in 1992.
Golden Years is from David Bowie’s Station to Station album released in 1975.
Tomorrow Never Knows is from The Beatles’ Revolver album released in 1966. The song title apparently inspired the title of the 1997 James Bond film Tomorrow Never Dies (which itself is supposed to be typo from the original idea “tomorrow never lies”.

Sign o’ the Times

For a news outlet that claims to have a mission to be “..the definitive source of data, insight and expertise on higher education worldwide” the Times Higher Education sometimes seems woefully short on understanding of the realities of international student recruitment. There is also an unhealthy focus on Russell Group universities which suggests more about the THE’s obsession with rankings, brands and research than any enlightened engagement with the broader sector. A recent example is its article “Overseas student recruitment windfall for leading UK universities” (January 18, 2022).

For those outside the THE paywall, the piece concentrates on some Russell Group universities seeing international student fee income rising significantly between 2020-21 and 2021-22. There is a suggestion that those in London and the south of England have done particularly well but that enrolments are “either flat or slightly down at some northern institutions, including…Liverpool, Newcastle and Sheffield.” As well as perpetuating the myth that the Russell Group are either all or the only leading universities in the UK this misses a much more interesting story about the way that changing international markets are altering the financial and recruitment dynamics of the sector.

What If becomes the Hot Thing²

As far back as January 2020 my blog predicted that “..the incoming surge of Indian students might bring a new dynamic to the market” and that “the return of post-study work visas has disrupted enrolment patterns and some lower-ranked universities may have the most cause to be grateful.” In March 2021 I presented data showing that, “..the distribution of Indian students by type of institution has proved to be significantly different to that of Chinese students” and gave an example as to why geographical location was not the driving factor. Then in January 2022, I reinforced the findings and made the point that “price points and graduate outcomes could become far more powerful signals than whether the THE, QS and AWUR algorithms choose to favour the rich, old and elitist.”

The impact on increases in student fee income is very clear. Year on year, percentage rises in international fees (excluding EU students) actually show that the Russell Group is underperforming many other universities. It is equally clear that location is not the main driver of performance.

The table below shows the 2018/19 to 2020/21 change in international enrollments from China and India across 8 Russell Group universities and 8 non-Russell Group universities (including low tariff institutions). This is shown alongside the year-on-year change in international fee income (excluding EU) from 2020-21 to 2021-22. Several non-Russell Group institutions have seen greater comparative financial growth by increasing student enrollments from India while those in the Russell Group remain reliant on China.

Table – % Change in Year on Year International Fee income 2020/21 and Change in Volume of Chinese and Indian Enrollments from 2018/19 to 2020/21

	% change in international (exc EU) fee income 2020-21 to 2021-22	Change in number (and percentage) of Chinese students 2018/19-2020/21	Change in number (and percentage) of Indian students 2018/19-2020/21
Southampton	92.1	745 (27.5%)	50 (27.8%)
Teesside	85	45 (13.4%)	1470 (358.5%)
Hertfordshire	76.9	-355 (-53.8%)	3930 (397%)
Greenwich	60.8	-285 (-44.5%)	1760 (239.5%)
Ulster	55.8	-85 (-47.2%)	3270 (2725%)
Queen Mary	47.4	600 (40.8%)	150 (29.4%)
Kingston	44.3	110 (24.2%)	1635 (302.8%)
Exeter	33	695 (50.7%)	135 (28.7%)
Northumbria	29.2	50 (10.1%)	2215 (357.3%)
Leicester	26.7	-590 (-36.1%)	1025 (683.3%)
Central Lancashire	22	-315 (-44.4%)	2365 (375.4%)
Warwick	21	730 (23.4%)	80 (11.2%)
Imperial	18.5	1115 (40.3%)	35 (14.3%)
Manchester	16.5	3000 (53.5%)	85 (16.2%)
UCL	16	4040 (64.7%)	55 (13.6%)
Sheffield	0.6	1550 (32%)	545 (187.9%)
Liverpool	-14.2	-1300 (-23.4%)	240 (200%)

Notes:

Non-Russell Group institutions are in bold
Financial information is taken from 2021-22 Financial Statements
Student enrollment data is taken from HESA

Newcastle University is not shown because it does not appear to separate EU and other international student fee income in its financial statements. However, the enrollment numbers comparison between it and the University of Northumbria (which is less than a mile away) demonstrates that blanket assertions about trouble up north are misguided. Northumbria’s international enrollments have outpaced Newcastle’s significantly over the past three years with growth from India providing the bulk of the additional numbers. It is notable that, according to HESA, Newcastle University had fewer Indian students in 2020/21 than in 2018/19.

Source: HESA (this data includes EU students. In 2020/21 Newcastle had 1,360 and Northumbria 1,450 from the EU)

The substantial gaps in performance on recruitment of students from India does raise a number of tantalising questions about the international student strategy and/or capability of Russell Group universities. Questions might include:

do they ignore academically qualified students from India;
do academically qualified students from India reject Russell Group institutions because of issues such as cost of tuition and accommodation;
are the number of academically qualified students from India so limited that Russell Group institutions struggle to grow numbers;
do Russell Group universities have some form of inherent bias against students from India.

Someone with a sharp eye to the sensibilities of the Home Secretary and the current political mood music might also wonder if the propensity of lower ranked, less costly and lower tariff universities to attract students from India will be seen as evidence that they are focused more on fee income than the “brightest and the best.”

Around the World in a Day³

The time lag in HESA figures means we will have to wait for some insights into whether Russell Group universities significantly changed their approach towards India in time for enrollments in 2021/22. Without such a switch some would seem to be relying on a resurgence of students from China to maintain numbers and financial performance. It seems likely, however, that their fee structure and overall costs might make it difficult to switch attention to price-conscious source markets.

While watching this space to see how things develop, one would hope that the THE starts to reflect that there is a world outside WC1, London, the south of England and the league tables. For many students, issues like cost, employability, post study work and routes to immigration are at least as important in decision making as the SDGs, rankings and research capability. With their fingers and a computer they can walk around the world in a day to assess their options and are capable of great flexibility in changing country, institution and course of study if it suits their needs.

Notes

Headline and sub-headings courtesy of the much-missed Prince.

Sign o’ the Times was the title track of a studio double album released in 1987. One of my guilty pleasures is the Starfish and Coffee track which Prince co-wrote with his then-girlfriend Susannah Melvoin. Cynthia Rose is a real person and apparently what she really told her teacher she had in her lunch box was “starfish and pee pee”.
What If is a cover version of a song written by Nichole Nordeman that appeared on her album Brave in 2005. Prince recorded his version with 3rdEyeGirl in 2013. Hot Thing appears on the Sign o’ the Times album and was recorded in 1986.
Around the World In a Day was the title track from the seventh studio album from Prince which featured the memorable Raspberry Beret that provided the name for UK band the Lightning Seeds through a misheard lyric. Ian Broudie, who formed the band, thought the line “thunder drowns out what the lightning sees” was “thunder drowns out the lightning seeds.”

Image by Gerd Altmann from Pixabay

A Civil Action

In the film A Civil Action, Jan Schlichtmann says, “The whole idea of lawsuits is to settle…”.¹ There is no settlement yet but the court case between² the University of South Florida (USF) and INTO University Partnerships (INTO) has been closed and further dispute resolution is planned. USF has dropped the case with the claim it has achieved the outcome it was seeking from its initial action.

Its Notice of Voluntary Dismissal³ on 3 January 2023 says that at the receivership hearing on 16 December 2022, the “evidence submitted by the parties proved Defendants, INTO USF LP and INTO USF, Inc., are taking the actions that the Financing Corporation’s declaratory judgment lawsuit sought (i.e., acknowledging the termination of the Stockholder agreement, gathering and protecting the Joint Venture assets, budgeting to fund the teach-out, and winding-up the joint venture).” In the transcript of the hearing the judge, The Honorable Darren D. Farfante, made broadly the same points while declining USF’s motion to appoint a receiver⁴.

It seems likely that further discussions between the parties will be conducted in private but after two previous failures there remains the possibility that these will be unproductive. Most importantly for some observers is that students, including a group arriving in Spring 2023, are being taught out. The transcript also tells us that the joint venture board has hired Berger Singerman, “to provide the joint venture with advice regarding the operation of the business during a wind-down, to provide advice regarding corporate governance matters and fiduciary duties.”

Presuming that wind-down results in the eventual closure of the joint venture it will leave INTO with six pathway joint ventures in the US from the eleven that have been started since 2008.⁵

Joint Venture Partner	Opened/Announced	Joint Venture Closed⁶
Oregon State University	2008
University of South Florida	2009	2022
Colorado State University	2012	2021
Marshall University	2012	2020
Drew University	2015
George Mason University	2014
St Louis University	2015	2021 (became 100% INTO owned
University of Alabama – Birmingham	2015
Washington State University	2017	2022
Suffolk University	2017
Illinois State University	2018

Last Orders⁷

While the case regarding the teach out and wind down of the joint venture has closed the flurry of claims and counter-claims suggests there is still plenty to be resolved. In this respect there are some helpful insights based on how the case might have developed according to a Joint Case Management Report filed on 6 December 2022⁸. The document summarizes the dispute and then goes on to outline key areas of activity ahead of being ready for a trial in February 2024 if the case had gone ahead.

The process includes witnesses to be deposed (up to 30 fact witnesses and four expert witnesses) and “an alternative dispute resolution” by the end of second quarter 2023. Other key dates in 2023 include selecting a mediator by 1 April, deadline to identify experts by 7 July, and expert discovery closure by 6 October. The expert testimony focused on the financial status of the joint venture, including its solvency, on 21 April 2022, and “alleged damages to the INTO parties.”

A recent article in Business Law Today made the point that the “median duration of a joint venture is ten years” and suggested that “all joint ventures end—so plan for it.” The trajectory of traditional pathways in the US is uncertain and this may not be the last closure, so universities considering joint ventures as a way forward may want to pay close attention. Another data point could be the reported settlement resolution with a total value of “around $6.4m” passed by Washington State University Board of Regents in July 2022 after the university’s relationship with INTO changed.

NOTES

This blog recognizes the complexity of the case and is not intended to reflect any view on the merits of either plaintiffs or defendants. References for filings are given in order that readers can seek further insight if they wish. Any amendments on matters of fact are welcome from authoritative sources.

The film is based on a 1995 book which tells the story of a real court case about environmental pollution in Massachusetts in the 1980s.
The case in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida Circuit Civil Division is formally between USF Financing Corporation (plaintiffs) and INTO USF LP and INTO USF, INC. The Consolidated Lead Case is 22-CA-006001, Div. L. Filing numbers below relate to this case.
Filing # 163938884 E-Filed 01/03/2023
Filing # 163938229 E-Filed 01/03/2023
Hofstra University is omitted – there is no listing in the INTO University Partnership report and accounts indicating it is a joint venture. All other entries in the grid are taken from publicly available information or observation of websites at the time of launch/closure.
Closures are rarely the subject of public announcements. Any authoritative amendments to these dates are welcome. In several cases the relationship has changed to become a direct recruitment rather than joint venture pathway arrangement.
Last Orders is a 1996 Booker Prize-winning novel by British writer Graham Swift. Its title relates to the Last Will and Testament of Jack Dodds and the instructions therein, but also to “last orders” the common call in the UK for final orders of drink before a public house closes.
Filing # 162471158 E-Filed 12/06/2022

Image by Chris Sansbury from Pixabay

Officium….Conflictus

A 2020 Harvard Law School Forum on Corporate Governance claimed that “…the overall state of JV governance is still not good.” The same Forum offered a piece in 2019 which explicitly discussed the “JV Directors Duty of Loyalty” and begins “Many joint venture board directors find themselves in a perceived state of conflicted interest.” It’s relevant reading when the court case¹ between INTO² and University of South Florida financing Company (USFFC) shows the Secondary Case³ naming four employees of the University of South Florida (USF) as defendants.

These individuals were appointed by USSFC as directors on the Joint Venture between USF and INTO University Partners (IUP), with one of them serving for just a single day on the joint-venture Board. The defendants, Jennifer Condon, Karen Holbrook, Nick Trivunovich, and Ralph Wilcox are collectively referred to in the submissions as the “Former USFFC-Designated Joint Venture Directors.”⁴. INTO’s claim is that, “As a result of the USF Parties’ threats and failure to perform their contractual obligations, as well as the Former USFFC-Designated Joint Venture Directors’ breaches of their fiduciary duties to the Joint Venture and INTO USF LPLP, Plaintiffs have suffered and continue to suffer financial harm in the tens of millions of dollars.”⁵.

INTO Claims Against the Individuals as Count V

The INTO claim for “Breach of Fiduciary Duty Against the Former USFFC-Designated Joint Venture Directors.” is Count V of their complaint⁶. The assertion is that they, “..breached these duties by continuing to serve on the Joint Venture’s board of directors with knowledge that USFFC and USF intended to and did purport to terminate the USA despite the Former USFFC-Designated Joint Venture Directors’ serious conflicts of interest.”

In the same Count, two of the four are further accused that they “..breached their fiduciary duties by actively advocating for the baseless termination of the USA [University Services Agreement]..” and that “Their advocacy for termination of the USA was motivated by their concern for the advancement of USF, not the Joint Venture or INTO USF LP, and their loyalty to USFFC and USF, whose interests they put before those of the Joint Venture and INTO USF LP.”

There is the further suggestion that, “The Former USFFC-Designated Joint Venture Directors breached their fiduciary duties by resigning as directors and leaving the interests of the Joint Venture and INTO USF LP without proper care.”

This was not the first time the question of conflict of interest had come up but it was an interesting reversal from an earlier accusation by Fell. L. Stubbs, Treasurer of USF and Executive Director of USSFC. On 13 May 2 he sent a memo alleging that “While INTO has continuously accused the USF FC appointed directors of conflicts that they have taken care to appropriately manage, INTO has not done the same. For instance, Anmar Kawash, an INTO appointed director to INTO USF, continues to represent the stockholder and IUP in the parties’ dispute.”⁷

Defendant’s Response and Motion to Dismiss Count V

The defendant’s response on 3 November⁸ was a Motion to Dismiss Count V claiming, “The ultimate issue…is whether the University of South Florida (“USF”) correctly terminated its University Services Agreement (“USA”) with the Company [INTO USF Inc,. It continued,“But that simple breach of contract case has exploded into an eight-count diatribe against any person or company that provided information to USF or agreed with the termination decision….” In addition to claiming that the individuals acted in ways that were “contractually agreed” and which they were “entitled to” do the response asserts that “…this lawsuit is the INTO Entities’ way of exacting revenge and forcing anyone who reported to USF about the Company’s financial distress to pay the penalty.”

In seeking the Motion to Dismiss there are claims the action is barred by sovereign immunity, absolute immunity and corporate “primacy of contract” doctrine, as well as failing to show a cause of action. There is a specific argument that the individual who was a director for one day “did not take part in any of the conduct about which the INTO Entities complain” because the appointment was made after “the SHA was terminated.”

Request for Production and a Further INTO Response on Count V

On 9 November INTO issued “Requests for Production”⁹ to each of the four individuals covering the period from January 1, 2019. The main elements requested are “all documents relating to the lawsuit”, “All documents and communications relating to the February 2022 board meeting”, “All documents and communications relating to Your resignation as a director of the Joint Venture”, and “All Your notes or minutes from any meetings, whether in person or remote, involving You relating to the Joint Venture and/or Plaintiffs”.

On 23 November INTO filed its response¹⁰ to the defendants’ Motion to Dismiss of 3 November, claiming “It is difficult to imagine a clearer example of divided loyalties and breach of fiduciary duty than the one laid out in the Amended Complaint.” The Response lays out its reasons for this claim and makes legal points against the assertions of immunity and other arguments for dismissal. The argument related to the individual who was a director for one day states that she “..breached her fiduciary duties to the Joint Venture by resigning from her position as Joint Venture director, leaving the Joint Venture without proper care..”

The Defendant’s Reply to INTO’s Response on Count V

To a casual reader, the Reply for the defendants’ on 2 December¹¹ adopts a tone that mixes legal argument with language that a detached observer might consider scornful. On sovereign immunity they say, in a “gotcha” moment, “Given this law, the INTO Entities pled directly into the sovereign immunity defense.” and conclude, “This end-run on USF’s sovereign immunity is futile.”

On Primacy Doctrine they suggest, “The INTO Entities confuse substantive and procedural law, as well mutually exclusive remedies.” On the failure to “state a cause of action” against Jennifer Condon they state, “The INTO Entities’ ineffectual response shows nothing more than their scorched earth policy.” This looks like a level of rhetoric which one assumes a judge will calmly sift through and ignore while considering the facts of the case.

Breaking Up Is Hard To Do

When Neil Sedaka released the song in 1962 he sang “Think of all that we’ve been through and breaking up is hard to do.” The current court saga certainly seems a long way from 2010 when IUP and USF began their partnership. Or even May 2013, when IUP founder Andrew Colin received a Global Leadership Award from the University of South Florida in recognition of his contribution to international education.

The intervening years may have led to a point where speculation about the “end of the long-term joint venture” model has become a reality. It may even give other joint venture directors pause for thought about the governance model they work under, the obligations they might have and the legal cover that is offered for disputes. In this case a moment of truth may come on 25 January 2023 when a hearing is scheduled to hear the motion to dismiss Count V on the grounds of sovereign and absolute immunity¹².

NOTES

This blog reflects on complex legal issues and makes no assertions in support of or against any of the parties involved. References are provided for readers wishing to read more detail. Any authoritative corrections on matters of fact are welcome.

All filing references relate to documentation filed with The Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida Circuit Civil Division. Further information about the case including the lawyers representing the parties are included in a previous blog.

In the Consolidated Lead Case CASE NO.: 22-CA-006001, Div. L, USF Financing Corporation (USFFC), a Florida not-for-profit corporation, is the Plaintiff while INTO USF LP, a Delaware limited partnership, and INTO USF, INC., a Florida corporation are the defendants (Filing # 156524107 E-Filed 08/31/2022).
As INTO USF LP and INTO USF, INC., are the listed parties in the cases the term INTO is used to describe them in this blog.
In the Secondary Case INTO USF LP, a Delaware limited liability partnership, and INTO USF, INC., a Florida corporation, are the Plaintiffs, while USF FINANCING CORPORATION, a Florida not-for-profit corporation, and THE BOARD OF TRUSTEES OF THE UNIVERSITY OF SOUTH FLORIDA, Defendants. The amended complaint (Filing # 157809124 E-Filed 09/20/2022) added the four individuals.
Filing # 157809124 E-Filed 09/20/2022
Filing # 157809124 E-Filed 09/20/2022
Filing # 157809124 E-Filed 09/20/2022
Filing # 153460265 E-Filed 07/15/2022 Exhibit G
Motion and Incorporated Memorandum of Law to Dismiss Count V of the Amended Complaint Against the Former USF FC-Appointed Directors Filing # 160604060 E-Filed 11/03/2022
Filing # 160982138 E-Filed 11/09/2022
Filing # 161827652 E-Filed 11/23/2022
Filing # 162259450 E-Filed 12/02/2022
Filing # 162395119 E-Filed 12/05/2022

Image by Mohamed Hassan from Pixabay