The news last week that US group Strategic Education will buy Adelaide’s Torrens University, along with Think Education and Design Media in New Zealand, for about $900 million, was certainly a surprise in higher education circles.
It comes amid unprecedented doom and gloom about the sector, with about $16 billion in international student revenue at risk because of COVID-19.
On top of it being a very good price for the university’s owner, Laureate International Universities, the fact that 53% of its students are overseas at present means the deal raises more questions than answers.
Even people inside the university who are positive about the multiple campus model were surprised at the timing and the price. Torrens is headquartered in South Australia but has five schools in eight campuses across the country and 19,000 students.
“We are confident about the coming months including next year because our enrolment rates have been healthy,” Torrens told Crikey.
“Importantly the government has just made an announcement about visas for international students studying online offshore because of border restrictions.
“These students’ online offshore studies will count towards post-study work visas — which is very important for international students. The numbers of online offshore students enrolling with us are already rising.”
Insiders say the deal has highlighted the importance of having an advanced technology platform for online learning. One of the sector’s dirty little secrets is that it was largely and dramatically under-prepared for the seismic shift to online learning triggered by the pandemic.
Any push for better online learning has been further dented by the outsized emphasis on research at Australia’s universities as they have chased the international student ponzi. Multiple academics across a range of universities who spoke to Crikey said universities have increasingly eschewed their traditional focus on learning in favour of pushing increased numbers of research papers.
More research is aimed at lifting university rankings, which are in turn used to market the universities and their courses to international students.
Torrens, Australia’s only broad-based non-religious private university (Bond University is a niche product, along with the privately owned religious institutions Notre Dame and the University of Divinity), is better prepared in the digital world than most, and is gearing up to offer online courses to students outside Australia from next year.
Anecdotal evidence points to Torrens picking up students from rivals.
Its new owner is very technology focused, to the point where it sees its technology platform, “Sophia”, as a point of difference, so much so that it released it for free for several months this year so other institutions could take a good look. The company also announced last week it would take one of its US universities, Strayer, completely online.
At present it’s unclear what Strategic aims to do in Australia, although insiders say it is not looking at further purchases and does not intend to rationalise its campuses. But it may see Australia with its 43 universities as a good market for its online technology.
As the sector wrestles with job losses that Universities Australia estimated to be as high as 21,000, it’s worth noting the sale was welcomed by Education Minister Dan Tehan.
The heady multiple of about 20 times earnings would put the University of Sydney’s value, for instance, at $3.5 billion — and that’s not counting its multibillion-dollar real estate portfolio. Torrens leases all its properties.
So far the Morrison government has shown no inkling towards helping a sector that it appears to see as a bloated training ground for lefties. This attitude is likely to increase the imperative for consolidation across the sector and, if the more rampant neoliberal influences in the Coalition have their way, perhaps a program of privatisation.
If this proves a bridge too far, at least at this stage, a less controversial move may be some real estate rationalisation for some easy bucks for a government already facing the imperative of having to find revenue streams to counter its snowballing debt.
RMIT, for instance, is a substantial landowner in the Melbourne CBD and has put its Bourke Street tower on the market in recent weeks, aiming to bank more than $120 million before leasing the building back. It’s likely to be the start of a trend.
With Australia’s city universities sitting on an eye-watering goldmine, it’s hard to imagine the government isn’t looking at a way of cashing in from universities who have, for the past few decades, cashed in themselves.