Deal focus: KV secures its biggest buyout

Private equity investors have plowed about $660 million into over a dozen Southeast Asian education businesses since 2016, according to AVCJ Research. In dollar terms, it is more than the sum of PE capital the sector received over the previous two decades. Malaysia accounts for approximately two-thirds of the $660 million and six of the deals, more than any other country.

“Malaysia is unique because it can provide high quality, English-based education of an international standard. The government has made it a key export area and they are keen to grow it. There are not many countries in Southeast Asia where the industry is so attractive on a global basis, in addition to having that domestic base,” says Karam Butalia, executive chairman and co-founder of KV Asia Capital.

Investment reached a record $370 million across Southeast Asia last year, helped by Affinity Equity Partners’ acquisition of the Malaysian assets of Laureate Education for $180 million. KV Asia has maintained this momentum in 2018 with a management buyout of APIIT Education Group at a similar enterprise valuation. It is the GP’s largest-ever deal and includes a sizeable co-investment contribution. KV Asia is said to have overcome competition from several larger investors to secure the asset.

APIIT Education Group comprises two tertiary institutions, Asia Pacific University of Technology & Innovation (APU) and Asia Pacific Institute of Information Technology (APIIT), with more than 11,000 students from over 110 countries (45% of the student base is foreign). A new campus was recently launched that will further expand capacity. The company also owns Asia Pacific Schools, a K-12 education provider.

Ekuinas acquired a 51% stake in APU and APIIT in 2011 for MYR102 million ($26 million) and bought out the remaining interest – plus related assets – for MYR247 million in 2016. It consolidated the businesses under ILMU Education Group with a view to pursuing an IPO but subsequently decided it could realize more value by selling off the assets piece by piece.

“One big attraction for us was backing a competent management team [which is taking a 10% equity stake in the business]. The second important thing is the business. It is the right size, covers the whole value chain from schools to universities, and has a good balance between domestic and international students,” says Vibhav Panandiker, a partner and co-founder of KV Asia.

The company is a leader in the IT and computer science space with 91% of students finding employment within three months of graduation, in part thanks to tie-ups with technology companies. There are plans to keep the product offering fresh and the students employable with the introduction of modules in areas such as data analytics and gaming.

Much of the demand for talent comes from Malaysia itself. Malaysian Digital Economy Corp. estimates the country faces a shortage of 7,000-15,000 IT professionals over the next two years.  

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• Topics
• Southeast Asia
• Buyouts
• Consumer
• Trade sale
• Malaysia
• KV Asia
• Ekuinas
• Education