BPP’s Dutch ownership brings call for scrutiny

All three of England’s for-profit universities owned in Netherlands

March 30, 2017
Canal houses, Amsterdam, Netherlands
Source: Istock

Calls have been made for greater scrutiny of the ownership of for-profit higher education providers after it emerged that BPP University is owned in the Netherlands by its US parent.

The disclosure means that all three of England’s for-profit universities are owned in the Netherlands, which is known for its attractive corporate tax regime. However, Apollo Education Group, which has owned BPP since 2010 and was recently bought by two US private equity firms, said it did not gain any tax advantage from Dutch ownership of the institution.

BPP has benefited from £26.6 million in tuition fee payments via the public Student Loans Company over five years since 2011, according to SLC figures.

Companies House documents show that BPP University is owned by BPP Holdings, which is in turn owned by Apollo UK Acquisition Company Limited, which is itself owned by Coöperatieve Apollo Global Netherlands UA (UA is the abbreviation for the Dutch-language term for “excluded liability”).

England’s two other for-profit universities, the University of Law and Arden University, are both owned by Global University Systems, a company whose leadership is Russian and which is registered in the Netherlands as a “BV”, the Dutch equivalent of a private limited liability company.

The government’s Higher Education and Research Bill, currently making its way through Parliament, aims to bring in more private and for-profit providers to compete with universities.

Times Higher Education asked Apollo why BPP is ultimately owned in the Netherlands, whether or not Netherlands ownership conferred any tax advantages for Apollo, and whether the location of ownership is likely to change under the new owners of Apollo.

A spokesman for Apollo Global, the group’s subsidiary for its non-US operations, said: “Apollo Global’s Dutch structure was put into place in 2011 in conjunction with the development of a new global learning platform. We do not gain any tax advantages related to the structure of our Dutch ownership of BPP.”

Apollo Education Group’s most recent filing to the US Securities and Exchange Commission says that “substantially all BPP students reside in the UK, and fund their education with personal funds, private loans, government financial aid funding and, in some instances, tuition reimbursement or other forms of assistance from their employers”.

Aldwyn Cooper, vice-chancellor of Regent’s University London, a charitable private institution, said that there were “some first-class for-profit institutions around the world”.

“That said, it must be a cause for concern in the UK that so many private higher education institutions in Great Britain are now being controlled offshore,” Professor Cooper added. “The interests, expectations and business operations of foreign investors may not be wholly consistent with UK needs.”

BPP adopted a non-profit corporate status in 2010, a change that helped secure exemption from charging VAT on tuition fees but that precludes it from distributing profits to Apollo (BPP’s 2016 accounts state that non-distributable retained earnings totalled £45 million).

However, in general, there are other means for parent companies to derive income from their firms in such ownership structures, by charging the firms for various services such as intellectual property.

Carl Lygo, formerly BPP’s vice-chancellor, left the institution earlier this month, soon after Apollo Education Group was bought by a US private equity consortium for $1.1 billion (£899 million).

The Department for Education is reviewing BPP’s eligibility for degree awarding powers and university title, as required when a provider changes ownership.

john.morgan@timeshighereducation.com

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Reader's comments (3)

How interesting that THE, which is owned by American PE TPG (much like BPP's American PE parent Apollo) and whose ultimate parent undertaking according to its accounts is TES Global Investments S.a.r.l, a company registered in Luxembourg, is taking issue with "off-shore" ownership in the Netherlands of all places (a high CIT jurisdiction, certainly when compared to the UK or *Luxembourg*). And on the point of "public funds" - TES (the parent company of THE) receives the bulk of its income from tax-payer funded schools and universities...
"...the Netherlands, which is known for its attractive corporate tax regime" Really? It takes 2 seconds on google to find out that the corporate tax rate in the Netherlands is 25% whereas in the UK it is currently 20% (with a declared intention of further reductions). It would be useful for THE to focus on the very many criticisms that exist of a profit-driven low quality operator like BPP and its parent University of Phoenix - appalling student satisfaction and completion rates, no academic freedom, and the list goes on. It is not only petty to focus on the ownership structure but also takes away from the real issues with for-profit education as exemplified by BPP.
It's correct that the corporate tax rate is higher in the Netherlands than in the UK. But, speaking generally, what is often regarded as significant are the exemptions from corporate tax that the Netherlands allows e.g. capital gains, income from foreign businesses. Chris Havergal (news editor, THE)

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