KinderWorld plans second IPO attempt with Vietnam landbank as sweetener
KinderWorld International Group (KinderWorld), is attempting an IPO for the second time on Nov 23. The first attempt back in 1H2019 was aborted after it felt the market timing was not right.
Not to be confused with local preschool operator Kinderland, KinderWorld comprises more than just kindergarten and enrichment classes for toddlers and kids. For one, KinderWorld’s schools are based mainly in Vietnam and encompasses the entire 12 years formal education for children, also popularly known as K-12. It does this through three main brands, KinderWorld International Kindergarten, Singapore International School and Pegasus International College.
“We are not just a K-12 business, we run schools from kindergarten to high school, and then after high school, we specialise in tourism and hospitality. We also own the licence for Outward Bound in Vietnam,” says Ricky Tan, founder and chairman of KinderWorld. “We provide the poly route and offer [the equivalent] of GCE O-levels at a lower price,” he adds.
Tan says the K-12 segment of the company is profitable while annual revenue contribution from KinderWorld and the Singapore International School segment totals about $60 million. “Revenue from Pegasus is $6 million but is still loss-making although we own a substantial landbank,” Tan adds.
In Vietnam, KinderWorld continues to acquire land to build schools. In Hanoi, Singapore International School@Gamuda Gardens is undergoing Phase Three construction. Costing $4.9 million, 4,500 sq m of gross floor area will be added, including a 400-seater auditorium and 10 classrooms. In addition, another Singapore International School is to be built within Singapore International School@Gamuda Gardens to provide through-train education for children from aged 6 to 18. Dubbed “Superschool”, the centre will sit on 2.3ha of land and have a capacity for 1,500 students. “We are building in phases and the Hanoi school is reaching 800 students. Compared to British
and American schools, our fees are in the mid-range,” Tan says.
“We need to invest US$15 million ($20.4 million) to operate the Superschool for 1,500 students — land cost not included. In total, the investment needed is about $40 million. The investment return is higher even though the course fee is lower than Singapore schools,” says Tan, drawing a distinction between the development cost of an international school in Hanoi compared to Singapore. For instance, the relocation by Overseas Family School, which is operated by locally-listed Overseas Education, from the Orchard area to a new campus in Pasir Ris reportedly cost $261 million.
“The government of Vietnam recognised that we’re here for educational purposes and assigned land to us at low cost to encourage private sector companies to set up private education facilities in addition to public education by the government,” Tan adds.
However, Tan has greater ambitions beyond the K-12 education segment. KinderWorld is planning a 60.86ha eco-tourism resort with educational facilities for outdoor life skills training in Vietnam through Pegasus Mixed Education & Eco-tourism Development. Estimated to cost US$100 million, the resort will comprise a 10.22ha Outward Bound Vietnam centre, 19.027ha of residential villas and a 10.53ha eco-tourism
and wellness centre. “We are working with Banyan Tree Holdings to develop the eco-tourism resort,” Tan says. The construction for Outward Bound Vietnam was completed in June after KinderWorld received a licence to operate the schools in the country. Construction of the eco-resort is likely to start early next year.
Asked where KinderWorld’s funding comes from, Tan says, “I’ve been in Vietnam for 20 years and the financial investment is from me as a shareholder. The K-12 segment has strong cash flow and whatever money we have, we reinvest. We can easily raise US$70 million for a US$100 million project with 70% funded by the bank.”
“When we venture beyond Vietnam, we will discuss funding. Many private equity (PE) funds know about us because many private schools are owned by them. But we do not want investment decisions to be dictated by PE funds. We want to take a longterm approach,” Tan adds. KinderWorld has outlined plans to expand into Indonesia, Myanmar, Cambodia and Kazakhstan too.
Tan believes KinderWorld offers a different investment proposition compared to other failed education investment themes in the market. These include Temasek Holdings’ investment in ABC Learning Centre, the languishing share prices of Overseas Education and MindChamps Preschool on the local exchange, and 8i Holdings and G8 Education which are listed in Australia, as well as the unknown investment outcome in the Learning Lab by PE firm Advent International.
For its second IPO attempt, the financial advisor and lead manager is likely to be Maybank Kim Eng, with AMTD a co-lead manager and underwriter. The AMTD Group has already dual- listed AMTD International here on the SGX, on top of its primary listing in New York. Another unit, AMTD Digital is also expected to have SGX-Nasdaq dual listing soon.
It remains to be seen if Tan’s own excitement about his company’s prospects can be translated into a successful IPO.