Bahema Becomes First Pure K-12 Education Company on B3

In the midst of one of the greatest challenges ever faced by the education sector—the COVID-19 pandemic—B3 has welcomed a new company from this segment: Bahema, the first company on the stock exchange dedicated exclusively to elementary and secondary education (K-12). Quietly, the company announced its name change from Bahema Investimentos to Bahema Educação.

This is not just cosmetic. It’s part of an effort to be seen as an operating education business and not merely an investment holding that allocates capital into schools.

This will be the first year the company—a small cap valued at R$155 million on B3 and listed on the Bovespa Mais segment—reflects in its financials the consolidation of investments initiated since 2017. That was when cousins Guilherme Affonso Ferreira Filho and Frederico Marques Affonso Ferreira Filho chose the K-12 education sector as the new focus for their family holding company, which has over 60 years of history. That year, after acquiring control of Escola da Vila—one of São Paulo’s most renowned constructivist schools—they began acquiring minority stakes in several other schools, often with options to take control within three years.

Now, the future has arrived. It’s as if 2020 marks the true launch of the business seeded back then. Bahema schools began this year with 9,800 students. By December, the group consolidated only 1,900 of them in its balance sheet. In Q1, this rose to 6,800 and will reach 8,400 starting in Q2—the rest remains tied to future control acquisition options.

These figures reflect new developments in 2019 and early 2020 when the company took control of six schools—through a mix of exercising past options and new acquisitions—not counting minority investments.

In total, over the past 15 months, nearly R$250 million has been invested between acquisitions and debt assumption. At the start of this new Bahema project in 2017, total acquisitions summed about R$50 million—mostly tied to control of Escola da Vila.

"We Are Becoming an Education Company"

“We are consolidating ourselves as an education company, becoming more active in the operation of the schools that are part of our ecosystem,” says Gabriel Ribeiro, who has just taken over as CEO after 14 years at Ânima Educação. His arrival signals a deepening focus on education operations.

Ribeiro now leads a project designed to last over 30 years—as Guiga (Guilherme’s nickname) often says—but also must address short-term challenges brought by COVID-19, like rising default rates, student dropouts, and potential new consolidation opportunities. A complex scenario for a debut.

The CEO believes that, given Bahema’s focus on the K-12 segment, the sector will emerge stronger. “I believe both schools as institutions and teachers will come out much more valued by society as a whole. Without a doubt, this will be a very positive legacy,” he said in an email interview.

In typical Brazilian humor, memes abound of parents nostalgic for schools. Jokes aside, the pandemic has highlighted the value of education—turning it into a strategic asset for the K-12 segment, compared to higher education. The question is whether this will compensate for the expected drop in family incomes.

Financial Impact and Consolidation Wave

In 2019, Bahema’s pro forma financials showed net revenue of R$252 million and EBITDA of R$12 million, combining all invested businesses. In contrast, official financial statements for the year recorded only R$53 million in net revenue and a negative EBITDA of R$2.3 million.

Last year, the company acquired control of Rio-based Forum Cultural, São Paulo’s Brazilian International School (BIS), Colégio Apoio in Recife, and a 15% stake in Centro Viva, also in Rio. It also exercised its option to take control of Escola Parque, invested in convertible debentures for Escola Mais (a greenfield project serving lower-income families in São Paulo), and formed a joint venture with Escola MeiMei for a Montessori education project in Rio.

In 2020, Bahema consolidated control over Escola Viva (São Paulo) and Balão Vermelho (Minas Gerais), with Escola Viva accelerated due to pandemic-driven financial stress.

With the exception of Escola Mais—a project leveraging the group’s pedagogical knowledge—all investments are in premium schools. The average annual tuition of Bahema-controlled schools exceeds R$38,000. The founding partners frequently emphasize: “The value of education is in the quality of teaching.”

In 2017, the annual combined revenue of invested schools—most still minority holdings—was around R$160 million with under 6,000 students.

Mint Capital’s Role and Future Plans

Although Bahema’s transformation was led by Guiga and Frederico, its largest shareholder today is Mint Capital, led by Cássio Beldi, with about 60% ownership—reached after several capital raises. The last capital increase, in October last year, raised R$73.5 million. Mint joined the venture in 2018, already focused on education, with Beldi serving as Bahema’s board chairman.

Since shifting its focus, Bahema has raised nearly R$105 million through share issuances—without going through a formal IPO, as the company already held public registration since 1974, predating Brazil’s Corporate Law (enacted in 1976).

Ribeiro says further acquisitions are not ruled out but will align with the current context and strategic positioning. “Historically, crises have been catalysts for consolidation processes across industries. Unfortunately, we believe many schools may not have the resources to survive independently, creating M&A opportunities.”

For the remainder of 2020, Bahema expects less M&A activity compared to the past 12 months. The focus will shift toward unifying management structures—while preserving each school’s independent pedagogy—by integrating cost center control, marketing, procurement, contracts, and especially financial management, often a major challenge for K-12 schools.

New capital rounds are under consideration, but Ribeiro hasn’t disclosed amounts or timing. “Our growth plans involve building a diversified capital structure. But we’ll always prioritize investors who see Bahema as a long-term education project—not just a return opportunity. I see more investors now with this balanced view, understanding the sector’s specifics and the advantages of investing in a project like ours,” he says.

With 512 classrooms open at the start of the year and no structural expansion, Bahema had a vacancy rate just below 26%, representing a potential R$100 million in additional revenue.

That was the world pre-pandemic—when expansion was the goal, not contraction. Nor was there any expectation of shrinking while facing increased management costs related to post-isolation operations—the new normal across the education sector.

Managing Defaults and Dropouts

To manage defaults and prevent dropouts, Bahema created a system offering temporary tuition discounts—up to 50% in some cases—with deferred balances payable in 16 installments until December 2021. For more severe cases, payments were suspended and will also be spread over future installments as the economy recovers. Ribeiro admits that at first, families were skeptical, but adoption has grown steadily.

Although declining to provide precise figures, Ribeiro says Bahema has managed to keep default and dropout metrics under control. “I believe much of this is due to our ability to adapt our in-person model to virtual learning,” he summarizes. Still, internal communications at Escola Viva revealed that default rates for April and May exceeded 20%.

The pandemic struck just as Bahema was reaping the first fruits of participating—even as a minority shareholder—in school operations. The 9,800-student mark at the start of 2020 represented Bahema’s first enrollment growth since 2017—a 9.2% increase over the prior year. This includes both higher new student intake and reduced dropout rates, now at 12.1%, the lowest in five years.

Diversification and Debt Profile

As a result of recent investments, Bahema expanded beyond the constructivist education model, acquiring stakes in traditional schools like Forum Cultural (Niterói) and the bilingual BIS.

As of March, Bahema had R$40 million in cash against R$25 million in loan and financing commitments. However, balance sheet liabilities included R$143 million in payables related to the acquisitions of Escola Parque and Colégio Apoio. These figures don’t include Escola Viva’s R$50 million in debts (mostly tax and fiscal liabilities, under long-term payment agreements) or R$14 million tied to exercising control over Balão Vermelho.

Historical Background

Bahema was founded in 1963 in Salvador by Guiga’s grandfather, Afrânio Affonso Ferreira, originally as an agricultural machinery company. With surplus cash flow, Bahema began investing in listed equities and made successful bets like fertilizer company Manah and auto parts maker Mahle Metal-Leve. Its greatest success came from investing in the holding company controlling Unibanco. After Itaú acquired Unibanco, Bahema distributed its bank holdings directly to family shareholders and began seeking a new focus—ultimately choosing education just over three years ago, fully reinventing the business.

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