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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 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.

Singapore

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.

K12

Chinese investors’ appetite for British schools deepens as 17 now owned by mainland groups

China-based investors and organisations have bought 17 UK independent schools since 2014, according to a new report, all of which were “struggling financially” before being acquired.

The majority of schools purchased by mainland buyers over the past six years have boarding facilities, the report by consultancy Venture Education found, and nearly a quarter (24%) have opened, or plan to launch, offshoots in China.

Three schools – Wisbech Grammar, Heathfield Knoll and Abbots Bromley – were acquired this year.

Last year, four private schools were sold to Chinese organisations. Kingsley School Bideford in Devon was bought by China First Capital Group, which backs KSI Education, the group that bought Heathfield Knoll, while Bright Scholar, a listed China-based school operator, snapped up Bosworth Independent College, St Michael’s School and CATS Colleges. The purchases by Bright Scholar were collectively worth nearly £200 million.

The report highlights a trend in which cash-strapped schools have fallen into the hands of Chinese investors and school operators, which typically see opportunities amid distress to acquire institutions at cut-rate prices and fill them with larger numbers of foreign students, who pay higher tuition fees. Many either already have operations in China or plan to launch sister schools to facilitate lucrative student exchange programmes.

According to Venture Education, “all of the purchased independent schools were struggling financially before the acquisition, with lack of enrolments as the main cause”.

The coronavirus crisis, which has already forced nine British independent schools to close down, could accelerate this trend, as many schools struggle to provide refunds and discounts and cope with tumbling enrolments without detriment to their balance sheets. Last month, Fitch Ratings said that private school operators in China in strong financial positions “may seek overseas expansion as more opportunities arise”.

Julian Fisher, senior partner at Venture Education, described the appetite among Chinese investors for UK school assets as “high”, noting that, for many, investing in British schools is “a safe bet”.

He said: “They not only have the capital value of the property and land but a general belief that they can make schools profitable again through an injection of funds and Chinese students.

“The additional form of value can come through opening campuses in China, or potentially in belt and road countries.

“If the UK school is managed well, with a quality team, this school can then provide curriculum, support teacher training and recruitment, and provide a UK base for engagement and exchange.

“As always, though, investors’ exuberance can easily outweigh the reality of turning around a school and managing intercultural teams with very different approaches and beliefs in education.”

Gordonstoun to launch Canadian campus under plans for global franchise network

Gordonstoun, the esteemed Scottish private school and alma mater of Prince Philip, is to open an offshoot in Canada as part of a network of franchise schools.

It comes four months after the school announced that it would establish a campus in China, under the guidance of BBD Education, a strategic consultancy based in the United Arab Emirates, which is also advising on its Canadian venture.

The new school, like Gordonstoun’s Scotland mothership, will be situated between the sea and the hills, spread over some 250 acres within Nova Scotia’s Annapolis County. It is set to open in August 2021.

Gordonstoun’s links with Nova Scotia, one of Canada’s most densely populated provinces, date back hundreds of years, when the main building at the school, Gordonstoun House, was owned by Sir Robert Gordon, the first Baronet of Nova Scotia. He was granted 16,000 acres on the coast of Nova Scotia.

A consortium led by Canadian businessman Edward Farren will build the campus and it will be opened in cooperation with local authorities and government.

In its pedagogy, the new school will implement the renowned Kurt Hahn philosophy, an ethos that “stretches, challenges, nurtures and develops every child”, according to Gordonstoun. It will be the world’s only school where students help operate local fire and coastguard services, it said in a statement.

Lisa Kerr, principal of Gordonstoun, said: “This agreement will pave the way for more children to benefit from an education based on Gordonstoun’s unique ethos, which combines high academic achievement with exhilarating outdoor experiences and a strong commitment to service to the community.”

K12

Revealed: Nine UK private schools that have closed down since the pandemic began

Nine independent schools in England are either set to close or explore fire sales in the wake of the Covid-19 pandemic, with around 30 in total said to be under threat of closure.

Ashdown House in East Sussex; the Minster School in York; King’s College Saint Michaels in Tenbury Wells; Moreton Hall Prep School in Suffolk; Park School in Somerset; St Peter’s Independent School in Northampton; Roedean Moira House in Sussex; Frederick Hugh House in Chelsea; and HawleyHurst in Hampshire have all reported that they are unable to continue trading.

EducationInvestor Global has reported on the individual closures of Ashdown House, St Peter’s, Moreton Hall and Roedean Moira House.

The Minster School, a preparatory school that traces its roots to the seventh century, announced that it would shut down due to a funding shortfall caused by Covid-19. Its operator, the Chapter of York Minster, said the school faced a “catastrophic loss of income” and consequently anticipates a £5 million gap in its budget.

King’s College Saint Michaels, an international boarding school that Inspired Education has owned since it took control of the King’s Group Two American schools in Sharjah will merge to reduce costs, in the latest sign of financial pressure on private school operators in the United Arab Emirates stemming from Covid-19.

Bukhatir Education Advancement and Management International (BEAM), a school operator based in the UAE, has announced that The American School of Creative Science in AI Layyah will merge with the last year, “will close its doors for good on 30 June 2020”, the school’s HR manager Le Roux Dupper said in a post on LinkedIn. “All staff are being made redundant,” he added. It was unclear from the post, however, whether this particular closure was linked directly to Covid-19.

The Park School, which opened in 1851 and taught some 250 pupils, crashed into administration in May after Grant Thornton, its administrator, failed to secure a American School of Creative Science on Maliha Road on 30 August, according to The National.

The tie-up will be valid for one year to reduce operational costs.

It comes as private school operators across the UAE, whose K12 market is dominated by independent providers, continue to grapple with falling revenues in the absence of financial support from government. buyer for the school, according to SomersetLive. In 2018, the school relocated to a location just outside Yeovil but was unable to offload its old site, which reportedly exacerbated financial pains.

Frederick Hugh House, a special needs school in Kensington founded by Amanda Barclay, the daughter of Sir Frederick Barclay, one of two billionaire brothers who own The Telegraph newspaper, has closed permanently due to “financial

Last month, a webinar hosted by this publication found that the UAE’s private education market could contract by 12% as a result of the Covid-19 pandemic, which forced schools and other educational centres to close indefinitely in March.

The American School of Creative Science will close on 2 July, according to reports, at the end of the summer term, throughout

hardship”. In a letter sent to staff, Anne Marie Carrie, chair of the school’s board of trustees, wrote that “there is no other viable option available to the charitable trust other than initiate the immediate permanent closure of the school and seek voluntary insolvency”, according to The Guardian. The school charged £50,000 a year in fees.

HawleyHurst, a private school owned by the founder of The Eden Project, Tim Smit, who acquired it from private equity-backed Minerva Education Group in 2017, collapsed into administration in April, but is understood to have since been put up for sale by Knight Frank. It is yet to secure a buyer, however.

Neil Roskilly, chief executive of the Independent Schools Association, told this publication that “there are around 30 schools which are distressed and could close”. He added, however, that it is difficult for his organisation to understand the “status” of each school because “it could be that they are in formal administration, or could have announced closure technically for redundancy purposes, but be in negotiations with other investors”. For this reason, he expects that “many would reopen under new ownership”,

UAE: American private schools announce tie-up as pressure mounts on finances

rather than close permanently. which learning has been completed at home.

BEAM has reportedly consulted Sharjah’s education watchdog on the merger, and pointed out that the move will not negatively affect students because both schools deliver the same curriculum.

Since 2016, 10 private schools have merged or closed in Dubai, according to the city’s education regulator.