It’s nearly a year since INTO University Partnerships (INTO) appointed its new chief executive and there’s been an acceleration of senior changes with new heads of recruitment, product/digital and people appointed and the addition of a chief strategy officer post to the Executive Team. It seems an open secret that another of the Executive Team old guard will leave in June and the leadership in the US looks to have been tweaked with some saying there are more change to come. That’s five new faces in a year in an Executive Team of ten so thoughts turn to what happens next and what’s the state of the portfolio?
Anyone who has seen change in a corporate environment will know the Machiavelli quote and that “there is nothing more difficult to arrange, more doubtful of success, and more dangerous to carry through.” They will also know the tendency of the old guard to still get together and slip around the side of the building every morning for the habitual cigarette break where they can gossip, moan and plot about the interlopers. However, Greg Shea of the Wharton Center for Leadership and Change Management tells us that “change is not about consensus, it is about critical mass”, so 50% may be enough.
Access All Areas?
Rumours are swirling that the company is planning to launch a new go to market strategy in Asia, probably Vietnam, where one of the much-hyped University Access Centers (UACs) already exists in Ho Chi Min City. According to the website UACs are under development in Bangkok, Bogota, Hanoi, Jakarta and New Delhi for launch by early 2022 and a further 15 planned by 2023. In one of the big student recruitment debates currently raging, INTO seems to be putting significant investment into “boots on the ground” rather than relying solely on the efficacy of online, aggregators and virtual counselling.
There is also talk of direct recruitment options maturing and becoming a key part of the sales strategy which seems a no brainer given INTO’s reduced number of pathway partners over the past few years. Shorelight heard the starting pistol on the direct recruitment race in the US more than six months ago so there is ground to make up. The UACs may, however, offer differentiation from Shorelight’s increasingly strident pitch as a “technology-enabled” business – when the word “technology” appears seven times in a three paragraph news announcement it must matter to them.
It also seems possible that INTO could be making a play for the ground that “global expansion experts” Sannam S4 Group has filled so well with its approach that makes “personal our number one priority”. The UACs could make useful physical locations to pitch for market entry and expansion opportunities and the notion of “internationalisation strategies from concept to delivery”. Having in country presence and a sales team on the ground was always core to the pathway operator model so it’s a logical extension to turn that into a full service pitch based on country expertise, where everything from market launch initiatives, TNE and campus management to returning graduate employability can be up for discussion with resource-constrained universities.
The Great Divide?
Time will tell how those possibilities play out but it is intriguing to think that INTO may also be taking a more radical look at how its UK portfolio* is managed to best effect by differentiating Russell Group institutions from the rest. One potential reason for considering the Russell Group institutions (including the wholly owned Manchester operation which primarily serves the University of Manchester) as a separate entity is that their performance offers the best chance for recruitment growth. Taking the pre-pandemic period the total enrollment growth of all eight INTO operations from 2016 to 2020 was 547 with the four Russell Group related pathway operations increasing by 672 while four non-Russell Group operations (which include the wholly owned World Education Centre) had an aggregate loss of 125.
Source: INTO Center Annual Reports
A direct comparison between INTO University of East Anglia and Queen’s University Belfast in the five years pre-COVID emphasises the point. It is startling to see the decline of INTO’s first ever joint venture and reflect that when 2021 reporting becomes available INTO Queen’s may have overtaken it in enrollments. Taking the five years from 2016 to 2020 INTO Queen’s increased enrollments over 63% while INTO UEA declined by 25%. Enrollment at INTO UEA has been declining almost every single year since 2015.
Source: INTO UEA and INTO Queen’s Annual Reports
While the University of East Anglia does not report its own international student enrollments separately, the impact of a declining pathway and no obvious direct enrollment growth to balance it can be seen by the fall of around £3m in international tuition fee revenue from 2018 to 2020. The joint venture drew down a loan from the UK Governments CLBILS Scheme to mitigate cash shortages during the pandemic and the University’s annual financial statements for 2020/21 tell us each partner guaranteed 50% of the loan up to a maximum of £7m. More chilling for the future is that the statements indicate that there “will be no distribution in respect of 2020/21 nor for the next three years whilst the joint venture recovers and builds up surpluses for distribution.”
Source: UEA Financial Reports and INTO UEA Annual Reports
End of the long-term Joint Venture?
The big differentiator for INTO in its early days was the notion that it signed long-term (usually thirty year) joint venture partnership deals with equal start-up investment and a 50% share in profits and losses with the university. The UK portfolio now falls some way short of that vision with INTO Newcastle becoming majority owned (51%) by IUP and INTO City having a distribution that goes 85% to Newincco 921 Ltd (an INTO subsidiary) and 15% to City Foundation Limited. Closure of INTO St Georges, INTO UEA (London), INTO Gloucestershire, INTO GCU and INTO Newcastle (London) have long rendered the multi-decade, higher education altering principles obsolete.
Even “The INTO Story” element of the company’s corporate web-site has lost the tale of founder Andrew Colin and, then, vice chancellor of the University of East Anglia, Professor David Eastwood, cooking up the joint-venture model as a mould-breaking idea. Professor Sir David Eastwood (now knighted) has become Chairman of IUP’s Board and sits alongside two representatives from Leeds Equity Partners who described IUP’s “transformational…industry-leading, relationship-driven model” when they invested £66m in 2013 to become 25% equity stake holders. At the time IUP claimed 16 university partnerships but nearly a decade later it is difficult to see more than 14 which fit with the original concept.
There has been a similar tale in the US where joint ventures at Colorado State, Washington State and West Virginia have closed in recent years and IUP has become the 100% stakeholder in its venture with St Louis University. It seems likely that, as the market has matured, the limitations of the model have become increasingly clear with competitors able to offer more agile, flexible or advantageous terms to institutions. It is also arguable that, for the pathway operator, being tied to less attractive institutions in a fiercely competitive market for international students does not offer the growth prospects that so attracted private equity a decade ago.
For INTO, the pandemic may have provided the moment for a rethink and a pause for breath where the opportunities from a resurgent UK drive for international student enrollment could be assessed. Fresh thinking on recruitment and delivery as well as a recognition that the portfolio is, if not sheep and goats, more a potpourri than a bunch of roses could bring results in the new environment. Despite launching into a highly competitive world, it probably can’t be any less productive than the past few years.
Notes
*The US environment was considered in depth in China Crisis for US Pathways and Pathways to the Future for US Big Two
Image by Gerd Altmann from Pixabay