1. Pearson Affordable Learning Fund Overview

2. PALF is a venture fund investing in start-ups that deliver financial returns and high quality education 1 PALF Long-term Objectives PALF invests in companies that: Demonstrate sustainable business models that can generate market financial returns over 5-10 years Relentless focus on efficacy and learner outcomes Target bottom-of-the pyramid/ lower income consumer markets Have scalable, proven models and credible management teams

3. Long-term, we want to provide millions of the world’s poorest children with quality education 2 Long Term Objectives To help provide millions of the poorest children in the world with a quality education, in a profitable and scalable manner To demonstrate to governments and donors that low-cost private education can help educate the poor in a cost- effective way

4. PALF operates at the intersection of three types of investors, integrating the best of each approach Longer horizons and intense social impact metric reporting Focus on maximising social impact Focus on financial sustainability and financial metrics Maximise profits and scale Provide services in regions that are currently underserved Emerging market experience Impact investing Private equity / venture capital in education Emerging markets investing Pearson Affordable Learning Fund We provide additional value through our deep education expertise and relentless focus on efficacy

5. Since PALF was established, we have: 1 Established Pearson as a leader in the affordable education sector 2 Developed a portfolio of seven investments serving over 20,000 children in South Africa, Ghana, India and the Philippines Established the Edupreneur Accelerator program in India and scaled the program to launch in South Africa 3 4 Catalyzing the global affordable learning agenda and enhancing Pearson’s knowledge and learning

6. PALF has built a diverse portfolio of seven affordable education investments serving over 20,000 children DESCRIPTIONINVESTMENT Omega Schools, Ghana LCPS chain in Africa (K-10) serving 19,000+ children in 40 schools 1 Sudiksha, India Chain of low fee 22 preschools and a winner of the Edupreneurs India program 2 APEC (Ayala JV), Philippines 3 LCPS chain with 12 schools in urban Manila, developed through a JV with Philippine’s largest telecom Avanti Learning Centres, India 4 After-school labs for university entrance exam preparation; >40% of Avanti’s students placed in the top 1% eAdvance, South Africa 5 Blended-learning LCPS with 2 schools in Johannesburg; efficacy results show Gr. 2 students performing above avg. SA Gr. 3 student after 1 year Zaya Labs, India 6 Blended learning school-in-a-box solution embedded in 30 schools Experifun, India 7 Science kit learning solution and a winner of the Edupreneurs India program 2

7. 6 Domain Expertise Business Expertise Network Access Talent Recruitment Good Governance 1 2 3 4 5 6 Sharing Learnings across Portfolio Five Techniques for Portfolio Support Approach to Portfolio Support Post-investment, PALF actively adds value to the portfolio through a six step systematic approach 2

8. 7 Focused on education entrepreneurs in the emerging market providing higher quality education to the lower income Delivers an education-focused curriculum over 3 months with tailored education mentors Run by two education start-up veterans with experience in Silicon Valley and India World’s only accelerator that is… Edupreneur Program Progress Two programs launched thus far in India (2013) and South Africa (2014) 25 education companies from 7 countries across Sub-Saharan Africa and India Seed investments made in Edupreneur India co-winners Experifun and Sudiksha by PALF and Village Capital Edupreneur Accelerator Program 3

9. We are also catalyzing affordable education through partnerships, recruiting talent and working with gov’ts Building pipeline through new partnerships and increasing scope Recruiting strong talent to the affordable education space Developing stronger government relationships Key Actions Detail Expanded our investment scope to include earlier stage investments and partner with promising entrepreneurs earlier Designed the Edupreneurs programme in India/ South Africa to incubate a new cohort of ventures Developed key regulatory and government relationships Worked with the World Bank to help guide their comprehensive research on low cost private schools regulations research, starting with Ghana Backed strong talent early through the establishment of a new JV in the Philippines Leveraged our global network to find strong entrepreneurs (e.g., formal partnership with Ashoka) in the education sector 4

10. We’ve documented key learnings over the last two years in a published ‘Lessons Learned’ paper The importance of a holistic approach 1 Focus on local costs and incentives 2 Efficacy requires systems 3 Investing in relationships pays 4 Value of good governance 5 PALF is a talent pipeline 6 Investments require a long time horizon 7 Insights don’t have market boundaries 8 4 Pedagogy, technology & system change must all be used to achieve access, scale and quality in education Working with low- income pop- ulations requires a focus on local costs PALF system- atically embed efficacy in our companies Creating good governance adds significant value for early-stage ventures PALF Lessons Learned Attracting and retaining great talent requires a bold yet achievable vision Venture investments will have a long time return horizon and require a tailored valuation approach Gaining insights in emerging markets is relevant for Pearson global businesses Investing heavily in on- the-ground support pays dividends

11. PALF has grown into a diverse team with deep investment and education expertise and experience Sir Michael Barber Chief Education Advisor Chairs PALF Investment Committee Katelyn Donnelly PALF Managing Director Sits on the Board of most PALF investments Ember Melcher Background: affordable education in India Focus: Edupreneurs Jacob Kestner Background: teaching education strategy Focus: Leader of SE Asia Portfolio/Pipeline Arvind Nagarajan Background: strategy and venture capital Focus: Leader of Latam & S Asia Portfolio/Pipeline Yiming Ma Background: corp. finance and strategy Focus: Leader of Sub-Saharan Africa Portfolio/Pipeline Gregg Alpert Background: Pearson Catalyst Mgr Focus: Edupreneurs, technology expertise Pearson Legal: Graeme Baldwin, Deputy General Counsel/ SVP Pearson Corporate Finance: Soren Koren, SVP Greg Blair, Analyst Pearson Regional Leaders: Fathima Dada, MD of Pearson Inside Services/ Direct Delivery Riaan Jonck, CEO of Pearson South Africa Amar Kumar 15% time: S Asia portfolio Nived Dinesh Pearson India Focus: S Asia pipeline PALF Leadership Core PALF Team Broader PALF Ecosystem in Pearson

12. As of Jan. 2015, PALF has grown into a $65M venture fund, the world’s largest pure investor in affordable education Expand to new geographies Invest in new business models Scaling faster and growing bigger Expansion strategies In January 2015, Pearson committed an additional $50M to PALF following PALF’s success with its initial $15M venture fund Strategy for PALF 123  We want to grow our portfolio to include investments in Latin America and other emerging markets  We are looking to expand our portfolio into new business models such as higher ed & vocational  We are searching for more and larger deals to provide more high- quality affordable education to all!

13. Appendix 12

14. 13 PALF INVESTMENT COMMITTEE MEETING PALF Investment Committee comprising of Pearson’s most senior leaders approve all investment and concept notes Sir Michael Barber (Chair) Chief Education Advisor, Pearson PLC PALF Investment Committee Members John Fallon Chief Executive Officer Pearson PLC Phillip Hoffman Head of Corporate Finance and Strategy Tamara Minick-Scokalo Head of Growth Markets, Pearson PLC Luke Swanson Transformation Director, Pearson PLC

15. Portfolio: APEC Located in Manila, Philippines Chain of low cost, employability-focused secondary schools Now at 12 schools and over 1,000 students Partnership between Ayala and Pearson $35 a month Curriculum is focused on real world skills and English literacy

16. Portfolio: Avanti Learning Centres Located in Mumbai, India High quality science education company with 600 students in 9 learning centres and 4 schools across India 15,000 applicants for 450 seats in 2014; ¼ the cost of competition 3x revenue growth year on year. $5Bn industry in India >40% of Avanti’s student place in the top 1% in college entrance exams

17. Portfolio: Omega Schools Located in Accra, Ghana Started with 10 schools summer of 2011 now at 38 schools and over 20,000 students Cashless, daily fee system – accountability from parents Workbooks, not textbooks iPad data and student information systems All costs localised

18. Portfolio: eAdvance Located in Johannesburg, South Africa Blended learning model pioneered by Rocketship Education Currently 2 Spark Schools with over 350 students Plan to reach 64 schools and over 60,000 students First private African primary school network to implement blended learning model

19. Portfolio: Zaya Labs Located in Mumbai, India Holistic blended learning solution provider for primary schools In over 30 schools and reaching 1,500 students this year Provide schools with “LabKit” and “ClassCloud” to ensure online and offline learning in low-income settings $5/student/month

20. Portfolio: Sudiksha Located in Hyderabad, India Edupreneurs India 2013 co-winner Network of 22 pre-schools across Andhra Pradesh and Hyderabad, with 92 employees and teachers Utilises local, unemployed women as teachers and employees Tuition-fee model of $8 per month per student The company’s main customers are the parents of urban, poor children from ages 2-6 years old who cannot afford traditional pre-school education

21. Portfolio: Experifun Located in Bangalore, India Edupreneurs India 2013 co-winner Low-cost, interactive science learning products, called Caboodle, aimed at improving science learning at the 6-10 grade level Pilot programs launched in 15 schools The company sells to LCPS serving poor students, in two forms; a teacher kit and student kit through one-time sale model with an average sale value of 1L to 1.5L INR.

22. Pearson Portfolio company: Bridge International Located in Nairobi, Kenya Now at 300 schools and over 100,000 students Cashless, mobile money payment $5 a month Teaching curriculum is all on tablets Academy-in-a-box