Petaling Jaya, 20 June 2019: Paramount Corporation Berhad (Paramount) is partnering with strategic investor Two Horses Capital Sdn Bhd (THC) to take its K-12 education business, the largest K-12 education group in Malaysia, to the next level of growth.
Paramount entered into an agreement with THC yesterday to divest its controlling stake in its K-12 education business at an enterprise value of RM861 million, subject to approval by the Ministry of Education and shareholders.
Paramount is a pioneer in private primary and secondary education in Malaysia, having established Sri KDU in 2003, followed by the Sri KDU International School in 2011. It acquired REAL Education Group in 2017. Today, its K-12 education business comprises the Sri KDU and REAL national and international schools, REAL Kids pre-schools and Cambridge English for Life (CEFL) enrichment centres. Another Sri KDU International School will open in Klang in 2021.
Paramount Group Chief Executive Officer Jeffrey Chew said Paramount’s ambition has always been to strengthen its businesses locally with a view to expand regionally.
“To do so, we believe the most efficient way is to work with a strategic partner with the experience, network and financial capacity,” said Chew, adding that Paramount will maintain a minority stake with board representation in Sri KDU Schools and REAL Education Group to ensure continuity in expertise and leadership in the schools.
Chew said the transaction unlocks the value of Paramount’s education business, and the cash raised would be used for working capital, to grow Paramount’s land bank for its property development business, and for shareholder dividends.
Rothschild & Co is the sole financial advisor to the Paramount board on the merit of this transaction, while RHB Investment Bank is the sole principal advisor. Meanwhile, Credit Suisse is buyside advisor for the transaction and Maybank is co-advisor to TPG.
He also said this move will help investors see Paramount’s two businesses of property development and education as stand-alone. With this, Paramount will focus resources to grow its property development division.
TPG Capital Asia, the Asian investment platform of global alternative asset firm TPG, will provide financing to the strategic investor as well as strategic and operational support, including leveraging on its network and experience in the education sphere.
THC is led by two corporate figures with proven experience in the education space. Tunku Ali Redhauddin Tuanku Muhriz has been involved in the education sector for over 10 years. He was actively involved in helping Marlborough College, a prestigious British independent school, establish itself in Malaysia, serving as its Chairman in Malaysia, and as an International Council Member in the UK. He is founding trustee and Chairman of Teach For Malaysia, a non-profit institution set up to bring about education equity. He is also Senior Advisor to TPG Capital Asia, amongst other roles he has in the corporate and non-profit space.
The other corporate figure is Ganen Sarvananthan, a Managing Partner at TPG Capital Asia. He was the Head of Investments at Khazanah Nasional for almost a decade before he joined TPG in 2014. Ganen has played a key role in TPG Capital Asia’s investment in Vietnam Australian International School (VAS) that has more than 8,500 students in seven campuses in Ho Chi Minh City.
Chew said, “We see the huge potential of the K-12 education business, and there is still a strong synergy between education and property development. We want to benefit from the business as it grows bigger and stronger.”
He added that what parents and students ultimately want is quality education reflected in a strong curriculum, a positive learning experience, and strong academic outcomes. “Paramount brought in Dr Goh Chee Leong, an experienced educationist, to head the K-12 education division as part of the strategy to grow our schools into truly world class institutions,” he added.
Tunku Ali said, “We are happy to embark on this journey with Paramount, the largest K-12 education group in Malaysia. We strongly believe in both the group and industry’s growth potential in Malaysia and abroad.”