An investment in securities involves a high degree of risk. All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing in Estácio Participações’ securities. In general, investing in the securities of issuers in emerging market countries, such as Brazil, involves a higher degree of risk than investing in the securities of U.S. issuers or issuers in other countries with highly developed capital markets. Estácio Participações’ business, financial condition, results of operations and prospects may be materially adversely affected by any of these risks. The risks briefly described below are those that the Company currently believes most likely may materially affect its performance.

Fatores de Risco

Fatores de Risco

1) Risks related to the Company
  • Estácio Participações faces significant competition in each program it offers and each geographic market in which the Company operates, and if it fails to compete effectively, it may lose its market share and its profitability may be adversely affected;
  • Difficulties in opening and effectively integrating and managing a growing number of campuses may adversely affect our strategic objectives;
  • Estácio Participações may not be able to identify and acquire new post-secondary education institutions, or to meet its strategic and financial goals in connection with any business acquisition;
  • An increase in delays and defaults in payment of our tuition fees may adversely affect the Company;
  • The Company may be held liable for extraordinary events that may occur at its facilities;
  • If Estácio Participações is not able to maintain consistent teaching quality throughout its school network or to maintain its current evaluation grades and the evaluation grades of its students, the Company may be adversely affected;
  • The Company’s strategy includes the intensive use of information technology and relies on its ability to follow and adjust to the technological changes in the educational sector, as well as on the proper and continuous functioning of the technological infrastructure to maintain its current competitive position and successfully implement its strategy;
  • The Company depends on the members of its management, who cannot be retained or replaced with people who have the same experience and qualification;
  • Unfavorable decisions resulting from legal, administrative or arbitrational proceedings may negatively affect the Company.
  • Estácio does not have formal performance mechanisms for assessing its administrative bodies or their members.
  • Adverse decisions in processes questioning compliance with the legal requirements for SESES qualification of as a beneficent social assistance entity may adversely affect the Company.
2) Risks related to the Company’s direct or indirect controlling shareholder
  • As Estácio Participações does not have a controlling shareholder or a control group holding more than 50% of the voting capital, it is susceptible to shareholder alliances, shareholder conflicts, delays in approving certain matters at Shareholders‘ Meetings due to lack of a quorum and other events arising from the lack of a controlling shareholder or control group holding more than 50% of the voting capital.
3) Risks related to the Company’s shareholders
  • The interests of the members of the management and executives of Estácio Participações may become excessively pegged to the price of the Company’s shares, since that their compensation is also based on a stock option plan.
  • The Company may fail to pay dividends to its shareholders;
  • The investment of shareholders of the Company may become diluted in the future and the price of shares may be affected.
4) Risks related to the Company’s subsidiaries and affiliated companies
  • Estácio Participações holds direct interest in the capital of SESSA, SESES and IREP, all of them 100%. As the Company’s results depend on the results of our subsidiaries, the Company may be negatively affected by a poor performance of the subsidiaries.
  • Estácio depends on the results of its subsidiaries and its results may be adversely affected if the performance of its subsidiaries is jeopardized.
5) Risks related to the Company’s suppliers
  • The Company and its subsidiaries may be solely or jointly held liable for labor debts of outsourced parties.
6) Risks related to the Company’s clients
  • In case the Company is not able to attract and retain students, or is not able to do that without reducing tuition fees, the revenues may be drop, thus causing the Company to be negatively impacted;
  • Estácio Participações is subject to risks that are normally associated with loan granting and, in the event that the Company is not able to fulfill the conditions established by these programs and partnership, it may lose a portion of its revenues and/or tax benefits.
  • Any future increase in the post-secondary dropout rate may jeopardize our operating results;
7) Risks related to the Company’s operating segment
  • The Company may be adversely affected if the government changes its investment strategy in education.
8) Risks related to the regulations of the Company’s operating segment
  • The Brazilian post-secondary education segment is subject to many laws and regulations, and the failure to comply with said laws and regulations may cause Government agencies, the MEC and third parties may conduct inspections, file administrative proceedings or initiate litigation against Estácio Participações;
  • Estácio Participações could be adversely affected if the Company is unable to renegotiate collective bargaining agreements with the labor unions representing its professors and employees or by strikes and other union activity;
  • If Estácio Participações loses the benefits of federal tax exemptions provided under the Prouni program, its business, financial conditions and results of operations may be adversely affected.
9) Risks related to the foreign countries where the Company operates
  • We do not operate abroad.