Hong Kong-listed Chinese international school operator China Maple Leaf is planning to acquire Kingsley Edugroup Limited, a private education service provider in Malaysia, for HK$432 million ($56 million) as the Dalian-based company aims to expand into the Malaysian market.
Maple Life is offering to purchase no less than 90 per cent shares in Kingsley at a price of HK$0.54 ($0.069) apiece, a premium of 12.5 per cent over the closing price of HK$0.48 ($0.062) quoted on the stock exchange on the last trading date of January 24, according to a filing with the Hong Kong stock exchange on Wednesday.
Kingsley will be taken private from the board and become a wholly-owned subsidiary of Maple Leaf once the transaction proceeds.
The acquisition will further enhance Maple Leaf’s position in the global education industry through “the potential synergic effect and economies of scale of the enlarged group.” It is expected to “strengthen the brand name of Maple Leaf by increasing the market share of schools and educational institutions,” said Maple Leaf in the filing.
Selangor, Malaysia-based Kingsley operates as a private education service provider which primarily offers courses ranging from nursery to A-levels education, or “advanced level qualifications” that are subject-based qualifications which lead to university, further study, training or work.
Kingsley went public on the Growth Enterprise Market (GEM) on May 16, 2018. The GEM is a board for growth companies that do not fulfil the requirements of profitability or track record for the main board of the Hong Kong stock exchange.
Established in 1995, Maple Leaf provides bilingual K12 educational services through self-operated high schools, middle schools, elementary schools, kindergartens and foreign national schools mainly in China and Canada. The company targets students from middle-class families who aim to pursue higher education abroad.
Maple Leaf, headquartered in northeastern China’s Dalian city, operates at least 100 educational institutions across 27 cities worldwide. The firm recorded over 41,500 students and more than 6,000 Chinese and foreign staff as of October 15, 2019, shows the company website.
The total revenue of Maple Leaf increased by 17.1 per cent to reach a record high of 1.57 billion yuan ($226 million), while its profit grew by 21.5 per cent to hit 654 million yuan ($94 million) for the year ended August 31, 2019, according to its latest financial report.
Before it went public on the main board of the Hong Kong stock exchange in November 2014, Maple Leaf received 180 million yuan ($26 million) in a Series B round from Sequoia Capital China in 2008. The company also raised $5 million in a Series A round from The Balloch Group, an independent advisory and merchant banking firm founded by former Canadian diplomat Howard Balloch.