Chip Eng Seng expands education business into China, invests 100m yuan in software firm

Singapore

CONSTRUCTION and property group Chip Eng Seng is planning to expand its education business into China with an investment of up to 100 million yuan in Guangzhou Yuanda Information Development, an education software business.

Guangzhou Yuanda's current key offering is online education via mobile applications and websites, for the teaching of mathematics to primary school students.

Chip Eng Seng said on Friday that the investment will be through the subscription of new ordinary shares representing up to 35 per cent of the share capital in a special-purpose vehicle, to be incorporated in the Cayman Islands.

The aggregate subscription price is about 100 million yuan, or US$14.6 million.

Due to restrictions relating to foreign investments under the People's Republic of China (PRC)'s laws, Guangzhou Yuanda will be undergoing restructuring before entering the share subscription agreement.

If the restructuring is not completed to the satisfaction of Chip Eng Seng's education subsidiary on or before Jan 31, 2019, the group has the right to terminate the agreement.

Chip Eng Seng had proposed in March a diversification of its business by venturing into the education sector.

It said that while property development and investment, construction and hospitality will remain core businesses, they tend to be cyclical and vulnerable to changing economic conditions.

In contrast, the education business provides the group with a steady revenue stream without heavy capital investment.

Chip Eng Seng later announced inJuly that its subsidiary had signed a sale and purchase agreement with an affiliate of private equity firm Navis Capital to acquire 70 per cent of White Lodge Education Group Services for S$13.3 million in cash.

White Lodge operates a chain of pre-school centres in Singapore and Malaysia.

Chip Eng Seng shares closed half a Singapore cent higher at S$0.845 on Friday.