This article first appeared in The Edge Malaysia Weekly on June 17, 2024 - June 23, 2024

TEN years since Southern Capital privatised HELP International Corp Bhd (HIC) in 2014, the private equity firm has decided to exit, and the buyer is none other than a consortium of shareholders led by the education group’s founding Chan family.

The family’s private vehicle — CL Heritage Sdn Bhd — has taken up a 70% stake in the subsidiaries of HIC, while the other two shareholders own the remaining 20% and 10% stake, according to deputy executive chairman Adam Chan Eu-Khin, son of the educational group’s founders Datuk Dr Paul Chan Tuck Hoong and Datin Low Kam Yoke.

“We paid RM200 million for the acquisition, but we assumed some debt. I think [the debts are] around RM100 million plus,” he tells The Edge in an interview.

Back in February 2014, HIC received a takeover cash offer of RM2.53 per share for the privatisation exercise from Southern Capital’s wholly-owned unit Better Education Enterprise Sdn Bhd, valuing the former at RM359.3 million then.

Adam says the collaboration experience with Southern Capital over the past decade was overall positive as the private equity firm did not interfere with management, which will still be driven by the family after the delisting from Bursa Malaysia.

“They [Southern Capital] have definitely helped to open doors for part of the businesses. [However,] there is a lot of unfinished work that we can do, for example, our Subang campus [where] we have 22 acres of land, we have only built half of it,” says Adam, who joined the family in managing the group since 2008.

“We have plans to complete the campus, so as part of this [acquisition] exercise, we are committed to spending another RM120 million to build the second half of the land.”

To fund the expansion, Adam says the relisting of HIC could be an option, with the targeted IPO (initial public offering) by 2026.

“Because we just bought over, we will need this year to tidy things up, then we will have two years of nice growth, and then 2026 is a good time for us to go to market. The first round, why we had an IPO [in 2007] was, my parents, being the founders, wanted to let the staff who have been there for 20 years or so also benefit from the growth of the school.

“Similarly, I think in the last 10 years, there have also been a lot of people with us. And we also want to reward these people [via IPO]. So, it is a combination of rewarding our loyal staff, raising money and having a platform for growth,” he says.

The education space has witnessed several major deals in recent years, the latest being Navis Capital Partners Ltd’s divestment of a 20.55% stake in SEG International Bhd (KL:SEG) to Tan Sri Clement Hii for RM112.98 million cash or 45 sen per share in May this year.

In 2019, real estate developer Paramount Corp Bhd (KL:PARAMON) divested its majority stake in UOW Malaysia (formerly known as KDU) for RM540.5 million cash to Two Horses Capital Sdn Bhd.

Boustead Holdings Bhd (KL:BSTEAD) had planned to divest its 66.41% stake in University of Nottingham Malaysia Sdn Bhd for £23.5 million in 2021, but the deal, which valued the university at RM236.5 million, lapsed in August 2022.

In March last year, IHH Healthcare Bhd (KL:IHH) completed the divestment of International Medical University (IMU) to Inbound Education Holdings Sdn Bhd (IEHSB) for RM1.24 billion.

IEHSB is a wholly-owned subsidiary of Inbound Education Partners Sdn Bhd (IEPSB), which is owned by Hong Leong Healthcare Group Sdn Bhd (45%), Singapore’s The Rise Fund Inbound SF Pte Ltd (45%) and the Employees Provident Fund Board (EPF) (9.99%). The Rise Fund was founded by TPG in 2016 with US$13 billion worth of assets under management.

According to Adam, HELP’s tertiary education currently has a student population of about 6,000, while the group’s international schools for K12 segment have between 3,000 and 4,000 students. K12 refers to the primary and secondary school levels.

“Now, [for] tertiary we are [at] 6,000 students, we used to be 7,000 plus [pre-pandemic]. The international schools didn’t lose any students [during the pandemic]. Or even if there were losses [of students], they made it back up very fast,” he says.

With the expansion in capacity in the group’s Subang campus, Adam says HELP aims to increase the total student population to 12,000 by 2028, while improving group-wide efficiency to raise profit margin.

“K12 segment’s margin for us is about 35%. For tertiary [education], at this moment, it is about 15%, we are working hard to increase that margin with technology,” he says.

Apart from HELP International School in Subang, which has about 1,400 students, the group also jointly owns Tunku Putra-HELP International School in Kuching and Crescendo HELP International School (CHIS) in Johor.

Tunku Putra-HELP is 30%-owned by Cahya Mata Sarawak Bhd (KL:CMSB) and 70%-owned by Ibraco HELP Education Sdn Bhd, which in turn is 49%-owned by Ibraco Bhd (KL:IBRACO) and the remaining by HELP. The school has about 800 students.

CHIS, which also has 1,400 students, is 70%-owned by Crescendo Corp Bhd (KL:CRESNDO) and 30%-owned by HELP, with the latter leading the management team there.

Adam shares that management is also looking to expand its international school footprint into Thailand, given the relatively stable regulatory environment, lower operating costs and bigger population.

“There is a nice market there [in Thailand] for K12. Indonesia has its legal complications with the licensing. In Singapore, it is just too costly to operate a school. So, I think the only other country that is big enough in terms of market [size], stable and mature enough, is Thailand. We have been looking at a few schools [in Thailand], potentially to acquire or to invest into,” he adds.

With the younger member of the founding Chan family in the driver’s seat, it will be interesting for the education sector to see how HELP is going to evolve in its journey to be potentially listed on Bursa Malaysia again in two years.

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