Minsheng sets up M&A fund with CICC as China tightens control on private education sector
- The fund aims to raise US$1.5b to invest in higher education segment
- Beijing’s move to curb expansion in private education sector has hammered education stocks since the second half of 2018
Minsheng Education Group, a Chinese private college and high school operator, will set up a merger and acquisition fund with investment bank China International Capital Corporation (CICC), according to a filing to the Hong Kong stock exchange on Wednesday.
The move comes amid mounting worries over China’s tightened controls on the expansion of private schools through M&A deals, which has hammered the Chinese education stocks around the world.
The fund – a partnership with CICC’s fund management arm CICC Capital – aimed to raise 10 billion yuan (US$1.5 billion) over four phases and would focus on investing in the private higher education segment, Hong Kong-listed Minsheng said in the statement.
It “will entitle [Minsheng] to the first priority to acquire investment projects invested by the M&A Fund, which provide a high-quality project reserve in a planned way for the group’s expansion,” the statement said.
Minsheng operates and has stakes in eight private colleges, including one in Singapore and one in Hong Kong. It has not slowed its pace of acquiring schools since Beijing’s unexpected policy shift in the second half of 2018 that dimmed prospects of China’s burgeoning private education sector.
It took a 51 per cent stake in a vocational school in mainland China’s eastern province of Shandong for 92 million yuan in November, and completed the purchase of a 51 per cent stake in a private college in southwestern Yunnan province for 583 million yuan in December.
The State Council, China’s cabinet, banned in November private kindergartens from seeking public listings in global capital markets to raise funds, after a draft education legislation in August in effect prohibited operators of primary and middle schools to expand through M&A deals.