CSED3 Cruzeiro do Sul Educacional

Cruzeiro do Sul Educacional, traded on B3 under the ticker CSED3, is one of the largest private education groups in Brazil, operating predominantly in higher education and with a relevant presence also in K-12 education. The group’s origins date back to 1965, with the founding of Colégio Cruzeiro do Sul in the eastern zone of the city of São Paulo, created by a group of young teachers in borrowed classrooms at the back of a church, initially focused on preparatory courses for the then highly competitive entrance exam to the middle school level in public schools. The company was formally incorporated in 1970 by the same founders and, in 1972, began operating in higher education with the creation of Faculdade Cruzeiro do Sul. Over the following decades, the group gradually expanded its activities, including elementary and early childhood education, until it was accredited as Universidade Cruzeiro do Sul in 1993 by the Ministry of Education, which consolidated its position in the Brazilian private university segment.

Starting in the 1990s, Cruzeiro do Sul Educacional structurally incorporated distance learning into its business model. In 1997, it began research in distance education and the use of information technologies in teaching, creating in 2000 the Distance Education Center and, in 2006, its first platform dedicated to this modality. In 2001, it professionalized academic management with the structuring of the Office of the Provost and Vice-Provost, a move that preceded a growth cycle via acquisitions that began in 2007. In this process, the group incorporated traditional regional institutions, such as Centro Universitário Módulo, on the northern coast of São Paulo state, and Centro Universitário do Distrito Federal (UDF), in Brasília, expanding its geographic reach and diversifying its on-campus higher education student base.

Inorganic expansion continued with acquisitions of well-regarded institutions in different regions of the country. In 2012, the company took control of Universidade Cidade de São Paulo (UNICID), with a strong presence in health-related programs, and obtained reaccreditation as a university and authorization to offer distance undergraduate courses. In 2013, it acquired ACEF S.A., the sponsoring entity of Universidade de Franca (UNIFRAN) and Colégio Alto Padrão, strengthening its presence in the interior of São Paulo state. In 2015, it expanded operations in Salto and Itu with Sociedade de Educação Nossa Senhora do Patrocínio, sponsor of CEUNSP and local schools. From 2018 onward, the group accelerated expansion into other regions, entering the South through Centro Universitário da Serra Gaúcha (FSG), CESUCA and other institutions in Rio Grande do Sul, and the Northeast with the acquisition of Centro Universitário de João Pessoa (UNIPÊ), reinforcing the network’s multiregional profile. In 2020, new acquisitions, such as Centro Universitário Braz Cubas in Mogi das Cruzes and Universidade Positivo in Paraná, further broadened the portfolio of brands and campuses.

Cruzeiro do Sul Educacional’s business model is centered on providing educational services as a single operating segment, generating revenue mainly through tuition fees in higher and basic education, both in on-campus and distance learning formats. As of December 31, 2024, the company reported net revenue of about R$ 2.6 billion and a base of 526 thousand students, distributed among K-12 education, undergraduate, lato sensu and stricto sensu graduate programs, technical and extension courses, served across 28 on-campus units and 1,672 distance learning centers. The internal structure is organized into three education verticals – On-Campus, Digital and Health – but for financial reporting purposes, management is treated as a single educational services business, with higher education predominating in revenue and profit generation.

In on-campus higher education, the group operates 14 institutions, including universities and university centers, with a broad portfolio in the exact and technological sciences, humanities and social sciences, biological sciences, health, environmental and agricultural sciences. Undergraduate programs include bachelor’s degrees, teaching degrees and technological programs, with hundreds of active courses at all units. In graduate education, the company offers lato sensu programs (specializations) and stricto sensu programs (master’s and doctorate), with twenty graduate programs, including doctoral and postdoctoral courses, recommended by CAPES. The company also markets short non-degree and vocational courses aimed at upskilling and developing specific competencies, which complement the regular undergraduate and graduate offerings. These educational products make up an integrated learning ecosystem, with different levels and formats of courses tailored to diverse student profiles.

Distance education has become one of Cruzeiro do Sul Educacional’s pillars, mainly through the Cruzeiro do Sul Virtual brand. In 2024, approximately 340 thousand students were enrolled in 262 distance undergraduate courses, representing about 65% of the total student body, with learning centers distributed across all Brazilian states and the Federal District. The company uses multiple digital delivery methodologies, including fully online courses, models with live classes and hybrid formats combining online activities with in-person meetings. The academic infrastructure uses virtual learning environments, virtual libraries and labs, web conferencing resources and media platforms for lecture streaming, in addition to subject-specific tutoring and career mentoring throughout the program, reflecting an operation that is intensive in educational technology, without the company being characterized as a software firm.

In addition to higher education, Cruzeiro do Sul Educacional maintains a presence in K-12 education through four schools: Colégio Cruzeiro do Sul in São Paulo; Colégio Alto Padrão in Franca; Colégio CEUNSP Itu in Itu; and Colégio CEUNSP Salto in Salto, all in the state of São Paulo. These units offer early childhood, elementary and high school education, using structured teaching systems and integrating infrastructure with the group’s higher education institutions on some campuses, such as shared laboratories, clinics and sports complexes. In addition, the company also operates in professional technical education at the secondary level through BRAZTEC in Mogi das Cruzes, accredited by the São Paulo State Board of Education to offer predominantly distance technical courses. The student base is highly fragmented and no individual client accounts for more than 10% of net revenue, underscoring the retail nature of the education business.

From a regulatory standpoint, Cruzeiro do Sul Educacional’s operations are mainly subject to the rules of the Ministry of Education, which regulate accreditation, reaccreditation and authorization of both on-campus and distance learning programs. The 2017 regulatory change, which allowed modality-specific accreditation and granted institutions autonomy to create distance learning centers by their own act, was a significant factor in the expansion of the company’s network of centers across the country. In addition to education regulation, the company is subject to the Anti-Corruption Law, the General Data Protection Law and other applicable legal frameworks, having put in place a compliance program with specific policies, a code of conduct and a whistleblower channel to monitor compliance risks. In terms of governance, the presence of significant institutional investors in the controlling shareholder group and the trading of CSED3 shares on B3 reinforce the corporate nature of management and adherence to governance practices typical of publicly traded companies in the Brazilian education sector.

From a sector perspective, Cruzeiro do Sul Educacional operates in the consumer cyclical segment, focused on private education, and is exposed to household income, student credit conditions and public financing policies. The company pursues a national multi-brand strategy, combining organic growth – through the launch of new programs, expansion of seats, creation of new centers and development of new digital offerings – with inorganic growth via acquisitions of recognized regional institutions. CSED3 shares on B3 thus represent an interest in a human-capital- and educational-technology-intensive services business, whose revenue generation is directly linked to the number of paying students, average tuition ticket, dropout rate and the ability to maintain quality indicators in line with MEC requirements and with its competitive positioning in Brazil’s private higher education market.