Ludwig-Maximilians-Universität in Munich, Freie Universität in Berlin and Goethe University in Frankfurt are probably well-known to most people – in contrast to the IU Group. However, more than 140,000 students study online, hybrid or face-to-face at the private university group's institutions. That's about as many as at the three traditional universities combined.

The IU Group is the holding company behind IU International University. The Walbrook Institute in London and the University of Fredericton in Canada have also been part of the group since 2023. Last year, it generated a turnover of around 600 million euros; this year it is expected to reach 650 million euros. The return on sales was recently more than 25%.

The IU Group deliberately makes access to the degree programme broad, and avoids restricted course numbers (numerus clausus) and specialised technical diploma requirements, as long as students fulfil certain admission requirements, such as having completed vocational training and at least three years of professional experience.

The broad access and online formats are however causing headwinds, as CFO Marvin Lange admits. „There are still reservations about online degree programmes,“ says Lange in an interview with Börsen-Zeitung. This annoys him: „We are not a second-class university.", he says. IU is „the largest university in Germany, even though we are financed by tuition fees only,“ says the 41-year-old.

But especially in professions with regulated access, for example via professional organisations, the requirements are strict. IU has already had to pay the price here. The IU had to reaccredit a dual degree course in architecture after several students demanded compensation because their degree was not recognised by the Chamber of Architects. The structures have now been adapted and the newly accredited IU degrees are recognised by the Chamber, assures Lange. There is still a constructive dialogue with the chambers of architects. „In the long term, we want to prove through quality that an online architecture degree programme is just as valuable as the traditional route.“

Around 70% of students at the IU study fully or partially online. On average, they pay around 13,000 euros over the entire duration of a Bachelor's degree programme. There are on-site locations in 38 cities for hybrid forms of learning, with a virtual campus as the central element.

According to Lange, the IU Group has almost 4,000 employees, even though the company has recently reduced its workforce. Prior to this, there was „a phase of hyper growth“, says the CFO. „We have smoothed out the cost base and processes to ensure sustainable growth in the long term.“

The IU Group has been backed by private equity investor Oakley Capital since 2017, which transferred the investment from its Fund III to a continuation fund in 2023. The company performed significantly better than in the original investment scenario, according to a statement issued back then. Fund III expected a gross return of 85% IRR (internal rate of return) upon exit.

According to Lange, more than 90% of the sales growth is still driven organically; the acquisitions in England and Canada were smaller consolidations to facilitate market access. „The next step would probably be a somewhat larger acquisition in the three-digit million range,“ says Lange. However, he does not want to rule out the possibility of incorporating the IU Group itself into a larger entity. „In principle, we are also open to a merger of equals.“ One driver for this openness is the introduction of artificial intelligence into educational programmes. „In our eyes, it makes a lot of sense to pool resources and expertise.“

Technology offers many opportunities, especially for online learning programmes. AI can tailor educational programmes to individual users. A student receives texts, while a fellow student receives the content via video. Previous knowledge and professional context can be incorporated.

„The AI can explain the context to me using examples that I encounter in my day-to-day work,“ explains Lange. In a self-experiment, the CFO completed two modules at the university - „in data science, that was really tough“.

The first test runs with AI took place at the IU Group almost five years ago, back then with GPT 2.0 – on the initiative of CEO Sven Schütt, Lange explains. „When he started, I thought he was crazy,“ says the CFO with a laugh. In the meantime, the database that has been created since then is a competitive advantage. „We have anonymised access to more than a million graded exams.“ Lange believes that it is almost impossible to differentiate yourself in the industry through content: „The content is already there anyway. If you want to attend the best business administration lecture in the world, Stanford puts it all online.", he says.

However, AI can prepare this content in a targeted manner so that the individual user understands it in the most effective way possible – and can even estimate when the person is ready for an exam. This makes it all the more important that the use of artificial intelligence is monitored. False information due to AI hallucinations must be ruled out when students interact with the in-house chatbot. „Otherwise students will lose all trust,“ says Lange.

This is why the principle of „human in the loop“ with human control applies: „The lecturers have to validate every question asked the first time,“ explains Lange. Until then, the answer is subject to change.

Lange believes that the IU Group has an advantage over many other universities in one respect: „All of our academic knowledge is available digitally on a standardised platform and can be searched by an AI", he says. This is because the content does not belong to the lecturers, but to the university.

In 2016, the IU introduced online exams for distance learning programmes, claiming to be the first university in the world to do so. The exams are comprehensively secured, says Lange. Open cameras and microphones are mandatory. „If someone keeps taking their eyes off the screen to look down to the left, that's a failed attempt – then we suspect a cheat sheet or a mobile phone,“ says Lange. The IU interprets the rules strictly. „We know that as a private online provider, we are under scrutiny. That's why integrity is so important to us.“

For Lange, joining the IU Group in 2019 was like entering a new world. He previously worked in the gaming industry and in the entertainment business. At the TV broadcaster ProSiebenSat.1, he was part of the management of the online video store Maxdome from 2013. „I was also personally motivated to work on the topic of education,“ says Lange. „Previously, my key figures were geared towards keeping people in front of the TV for as long as possible. The social contribution was rather limited.“

Lange describes the exchange with the private equity owner Oakley Capital as „close cooperation at eye level“. The industry usually thinks in five-year cycles; the switch to the Continuation Fund was in 2023. In addition to a merger, Lange is also keeping other options open. „In principle, we are not ruling out any exit route,“ says the CFO. A public listing is conceivable – „but has the disadvantage that the stock market is sometimes a little too impatient for such a long-term product as education,“ he surmises. The CFO also finds the private IPO option interesting. The offer is only aimed at selected investors or institutional investors. „We'll have to see what the market is ready for.“