Deal focus: Ednovation finds China solution

Ednovation, an early childhood education group, started out 20 years ago developing online curricula in Singapore. The EdnoLand e-curriculum, which emphasizes English and Chinese learning, caught on quickly and was used by more than 17 kindergartens in the city. The founder then opened several brick-and-mortar centers – Childfirst – in Singapore to complement its online business, while Ednovation also entered China directly, building up a network of 11 pre-schools in Chongqing.

Looking for support to boost the company’s presence in Asia, the founder approached various GPs. Singapore-based Tembusu Partners ended up investing S$20 million ($14 million) in 2013, with a view to supporting expansion in China and Singapore. Over the last few years, Ednovation completed two bolt-on acquisitions: Cambridge Pre-Schools and Shaws Preschools, both based in Singapore.

“We wanted to do the third acquisition in China, so the company started a capital financing exercise, but along the way the acquisition didn’t happen,” says Emily Goh, principal at Tembusu. “As part of that process we spoke to several Chinese PE firms about an exit. Ednovation’s founder had a goal to penetrate further into the Chinese market, so it was logical that the next investor would be a group that could help Ednovation meet its targets.”

CDH Investments recently acquired a 36.4% stake in Ednovation from Tembusu in a deal said to be worth more than S$50 million ($35 million). As part of the agreement, CDH put in an additional S$10 million of capital to support Ednovation’s business growth. As a result of the equity dilution from this transaction, the China-focused GP will increase its stake to 51% following with the founder holding 49%.

During Tembusu’s ownership period, Ednovation’s network has grown to more than 60 schools in Southeast Asia and China under three brands. There are eight Cambridge, five Shaws and three Childfirst campuses in Singapore; 22 Childfirst campuses in China; and two Cambridge campuses in Indonesia, 21 in the Philippines, and one in Cambodia.

“Over the years, we focused on the integration of these businesses post-acquisition, rather than jumping into further expansion straight away,” says Goh. “We integrated the various curricula from the three schools, ensuring along the way that any transitions – for teachers, parents and children – would be smooth. It was important to us that the pre-school stakeholders would not have to worry about any of the changes at Cambridge and Shaws. This business is all about trust.”

While Childfirst and Shaws run self-owned teaching centers, Cambridge operates schools under a franchise model in addition to directly owning some centers. There are several initiatives to develop Cambridge and Shaw in China, with Cambridge set to lower price points to suit the local market. Meanwhile ChildFirst plans to expand across different Chinese cities. 

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• Topics
• Southeast Asia
• Greater China
• Consumer
• Expansion
• Singapore
• China
• Education
• Tembusu Partners