The fall on international bourses is being touted as having an impact on many sectors of the economy including education. A recent article in The Bookseller says that mega deals like Riverdeep’s takeover of Harcourt and Houghton Mifflin may be a thing of the past because the private equity firms they work with will be unable to tap into cheap debt funding.

What is also being overlooked is the tranche of funds being generated by petrodollars, some of which are also financing (partly, not wholly) some of these deals. In Riverdeep’s case, while most of their debt funding is from Credit Suisse and Citigroup, they also have money from Saudi investment company Obeikan.

Servicing the debt on these two deals will be a stretch for any company, but now that the corporate vehicle for all of this (called Education Media and Publishing Group) will be domiciled in the Cayman Islands, we may never really know what goes on.

www.hmco.com