Alpha DX proposes acquisition of education institute for S$24 million

ALPHA DX Group on Wednesday announced the proposed acquisition of educational institution ERC Institute (ERCI) for about S$24 million.

In a bourse filing, Alpha DX said that it, along with its wholly-owned subsidiary Asnaro Enterprises, had entered into a conditional sale and purchase agreement with DiDi Investments the same day, in relation to the proposed acquisition.

Asnaro Enterprises had been incorporated by Alpha DX on April 23 as an investment holding company for the purpose of conducting the proposed acquisition.

The transaction's S$24 million will comprise S$18 million to be fulfilled in cash, and up to S$6 million to be fulfilled through the allotment of up to 20 million ordinary shares of Alpha DX, at an issue price of S$0.30 per share, subject to the fulfilment of certain performance conditions.

These performance conditions include ERCI entering into a definitive agreement with the Uzbekistan government which will generate a secured annual revenue exceeding S$4 million, along with securing an annual revenue exceeding some S$4 million from a source other than the tuition fees and revenues generated from the agreement with Uzbekistan.

Additionally, ERCI would also be required to enter into a definitive partnership agreement with two or more new universities that would collectively increase its total number of student enrolments by at least 40 per cent as compared with the previous year.

ERCI was incorporated in Singapore in 2003, and is in the business of providing various EduTrust certified academic programmes through collaborations with global institutions, such as advanced diploma, bachelor's, and master's degree programmes.

The institution is also fully owned by DiDi Investments - a private company that was incorporated in Japan in 2019, and is involved in the learning and education business in the country.

Alpha DX said it intends to finance the proposed acquisition through internal funds as well as proceeds from a fund-raising exercise, either through a private placement or through proceeds from the exercise of options by DiDi Investments.

At an extraordinary general meeting that was held by Alpha DX last October, shareholders had then approved the issuance of up to 171.43 million ordinary shares of the company pursuant to the conversion of a S$22 million convertible loan and 85.71 million on-transferable options to DiDi Investments.

On its rationale for the proposed acquisition, Alpha DX said that upon integration of the business operations of ERCI, the group's board of directors is of the opinion that "in addition to the expansion of its customer base, the group will be able to leverage on and benefit from the expertise of (ERCI), particularly in relation to the provision of educational services, customised learning content, as well as potentially expanding the group's network and collaborations with global institutions".

It added: "As such, over time, the group will stand to benefit from the potential commercial, operational and costs synergies, particularly where (ERCI's) capabilities can benefit the group."

Shares of Alpha DX closed flat at S$1.28 on Wednesday, prior to the announcement.