Strayer Buys Jack Welch For-Profit

NEW YORK (TheStreet) -- Future investment bankers and aspiring dealmaking MBA protégés may get a boost after Strayer Education (STRA) education bought the Jack Welch Institute of Management. However, their job prospects may have dimmed Friday as Barclays (BCS) sold its private equity unit.

After partnering for two years, Strayer is buying the Jack Welch Institute of Management in a push to bolster its executive MBA and business certificate offerings. The JWMI, founded in 2009 by former General Electric ( GE) chief executive Jack Welch, offers an online executive master of business administration program as well as six-week certificate programs for business leadership. Courses include business ethics, leading in the 21st century, people management, finance electives and a capstone program of competitive entrepreneurship, among others.

Jack Welch, former GE chief executive, founder of JWMI

For Strayer, which was founded as Strayer's Business College in 1892 and has since moved to online education, it's a push to bolster its online business education focus. In 1996, the school began its online transition and, two years later, it was granted university status. The classroom and online business education provider has 92 campuses around the country and says that it has roughly 60,000 current students.

About the deal, Jack Welch said, "Our vision has always been to build JWMI into the number one online business school in the world," in a press release. He added, "Combining with Strayer University gives the Institute the educational foundation, the reach, and resources to achieve this vision." At the JWMI, Welch regularly gives students exclusive video addresses, according to its website.

Strayer shares rose nearly 5% to $95.60 in afternoon trading on news of the deal. The Arlington, Va.-based company's shares are down nearly 40% year to date as concerns over the efficacy of for-profit education and a reliance on government backed student loans increased this year.

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In 2010, Strayer had $131.3 million in profit, but profit fell nearly 40% to $13.9 million in its most recent quarter. The company's shares are down more than 20% since its 2006 public offering and have lost nearly 70% since reaching an all-time high of $254 a share in April 2010, as students looked to build business skills to weather the worst recession since the Great Depression. The company has also avoided some of the regulatory headwinds facing its for-profit peers like Apollo Group ( APOL) and Corinthian Colleges ( COCO).

In his 21 years as General Electric's CEO, Welch grew revenue fivefold from $25 billion to $130 billion and earnings tenfold to $15 billion. According to the JWMI, "His achievements are considered epic, and as a result, thousands of companies around the world have adopted The Welch Way." In 2000, Fortune magazine called Welch the "Manager of the Century." Welch chronicled his successes at GE in a bestselling book called Winning.

After retiring as GE's CEO in 2001, the company continued to succeed. However, in the financial crisis, the company's reliance on its finance division GE Capital put it close to crisis. In 2008, GE Capital converted to a bank holding company and took a $139 billion F.D.I.C backing of its debt.

The Jack Welch Management Institute is not connected to the John H.Welch College of Business at Sacred Heart University in Fairfield, Conn., which was given Welch's name after a gift in 2006.

Barclays ( BCS), the second- largest bank in Britain, is selling Barclays Private Equity to the investing unit that's valued at $71.7 million, in a move to bolster capital and exit a proprietary investing business. Barclays Private Equity will be bought by its management and will be renamed Equistone Partners Europe.

European banks like Royal Bank of Scotland ( RBS), Credit Agricole and U.S. giant Citigroup ( C) have looked to divest private-equity businesses to bolster capital and exit risky businesses.

In October, KKR ( KKR), BlackRock ( BLK), Onex of Canada, sovereign wealth fund Singapore Investment and Caisse du Depot et Placement du Quebec were reported by Reuters to have submitted bids up to GBP300 million for the private-equity unit of the French insurance giant Axa after it considered a sale of its private equity unit.

The Equistone private equity business said it will make investments as large as over $400 million and separately, Barclays is looking to sell an additional $795 million in private-equity investments, according to reports from Bloomberg.

-- Written by Antoine Gara in New York

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