NEWS
K12
Singapore: Maple Leaf to buy Canadian International School for £386m as it bolsters overseas presence Maple Leaf Educational Systems will acquire the Canadian International School (CIS) in Singapore for S$680 million (£386 million) as the China-based school operator expands its footprint outside the mainland. Following the acquisition, the Hong Kong-listed organisation will take control of one of Singapore’s largest for-profit international schools, which has some 3,500 students enrolled across its two campuses. According to sources, Maple Leaf’s offer bettered bids tabled by China’s Primavera Capital Group, a private equity firm which owns independent school chain Spring Education Group in the US, and EQT, another buyout house. In a statement, Maple Leaf, whose schools deliver a Canadian curriculum, said it will bring “a top-tier brand” into its portfolio of schools, most of which are located in China with a handful in Canada, Australia and Malaysia. “The acquisition of CIS is an excellent fit with our strategy to grow internationally and gives MLES a base in the attractive international school sector in Singapore,” said Sherman Jen, chairman of Maple Leaf. “Following the acquisition, our overseas schools will generate approximately 30% of MLES’s total revenue.” Shares in Maple Leaf, which caters to more than 43,500 students, rose by as much as 10.4% on 22 June – the biggest increase since late April. Subject to approval from shareholders and regulators, Maple Leaf will acquire 90% of CIS in the third quarter of this year, and the remaining 10% after the close of the academic year ending in July 2022. It is the latest sign of Chinabased private school operators
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building out international operations despite the worst pandemic in generations. China’s Bright Scholar, for instance, last year spent nearly £200 million buying independent schools in the UK and elsewhere. Some 17 UK private schools are owned by China-based groups. Fitch Ratings, a US-based credit rating agency, said in May that private schools in China “with strong financial flexibility may seek overseas expansion as more opportunities arise” amid widespread distress caused by Covid-19. Founded in 1990 in Singapore, CIS is a premium all-through international school teaching the International Baccalaureate curriculum with a “highly acclaimed” English-Chinese programme taught by qualified native speakers. It is currently owned by Southern Capital Group and HPEF Capital Partners, two private equity firms.
According to a Maple Leaf investor presentation obtained by this publication, CIS has a 20% share of Singapore’s premium private school market, which is home to competitors such as Stamford American International School, GEMS World Academy, the Australian International School and Nexus International School. A source told this publication that the school makes around S$50 million a year, and that auctioneers had been targeting a price representing 15-17-times 2020 EBITDA since launching an auction in the fourth quarter of last year. The acquisition of CIS is sizeable, considering Maple Leaf as an organisation is currently valued at HK$6.95 billion (£710 million). One source, who noted that one of CIS’s campuses is due to be returned to Singapore’s government next year, described the deal as “high risk when it’s that much money for just one
school” and highlighted “the risk that students will leave when one of the campuses closes”. The agreed price “is a lot of money versus their [Maple Leaf’s] current size and their own EBITDA multiple is 10, so this would be dilutive”, the source added in reference to the S$680 million price tag, which is around 14-times CIS’s annual earnings. “Maple Leaf owns a school campus in the East of Singapore, so they were the only bidder that could replace the campus that the Singapore government is taking back.” According to its investor presentation, Maple Leaf will finance the acquisition using a “bank loan” and “internal resources”. Over the next five years, the group is targeting 110,000 enrolments worldwide, it said. Last year, EducationInvestor Global spoke to the vice-chairman of Maple Leaf’s board, Howard Balloch, about the group’s international ambitions.
EducationInvestor Global • June 2020
