HK’s Value Partners to launch education sector-focused PE fund in China

Value Partners Chairman and Co-Chief Investment Officer Cheah Cheng Hye. Grabbed from company's Youtube page.

Hong Kong-listed asset manager Value Partners Group said it is establishing a private equity fund that focuses on the Chinese education sector, with a fundraising target of Rmb5 billion ($754 million) and a term of five years.

In a statement posted on its website, the independent asset management firm said it has entered into an agreement with Huajiao Education Technology, a subsidiary of China Education Group Holdings, a listed education management firm, for the launch of VP-CEG China Education Fund.

The fund will be the inaugural fund of VP Shenzhen, Value Partners’ newly established private equity subsidiary on the mainland of China. VP Shenzhen is located in the Qianhai Special Economic Zone and is licensed to raise funds both on the mainland of China and overseas to invest in private equity projects in China’s domestic market.

“The fund will primarily invest in private higher and vocational education on the mainland of China, with a focus on control investments,” Value Partners said.

Value Partners and CEG are limited partners in the VP-CEG China Education Fund and will make an initial contribution of Rmb370 million ($56 million) and Rmb250 million ($38 million), respectively. A subsidiary of each of Value Partners and China Education Group will serve as co-general partners of the fund.

“We are excited to launch our first private equity fund on the mainland of China at a time when Chinese investors are increasingly looking to diversify their investments and the ecosystem for private investments in the market is becoming increasingly more vibrant,” said Cheah Cheng Hye, Chairman and Co-CIO of Value Partners.

The fund, according to Value Partners CEO Au King Lim, marks an “important milestone” in both Value Partners’ growth on the mainland of China and its expansion into the alternatives space as we broaden our product suite.

The launch of the fund, which is set in 2019, is timely as many private schools in China need capital for further growth, according to Yu Guo, Co-Chairman of China Education Group.

“Many private education operators have fallen into a development bottleneck after operating for more than a decade. They need capital and professional management for further growth. By setting up the fund, we hope to provide a platform and win-win solutions to peers and partners for generating synergies and contributing to the development and growth of China’s private education sector,” Yu said.

Value Partners became the first Hong Kong-based asset manager to be granted a Private Fund Management license on the mainland in November 2017 via its Shanghai subsidiary. It unveiled its first PFM fund in January 2018.

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