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Chip Eng Seng, Lum Chang announce new business acquisitions

Developers cum construction firms Chip Eng Seng and Lum Chang on Friday announced acquisitions of new businesses in education and health care respectively.

Chip Eng Seng said that its subsidiary has 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 currently operates a chain of pre-school centres in Singapore and Malaysia. Since its inception in 1999, White Lodge has expanded from one pre-school centre in Bukit Timah, Singapore to seven pre-school centres in Singapore and two pre-school centres in Malaysia. 

Chip Eng Seng said that the purchase price will be further adjusted for any changes in the working capital of White Lodge and its subsidiaries. The purchase price will be funded and paid out of the group’s internal cash resources.

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The completion of the sale is conditional on consent being obtained for some properties leased by the White Lodge Group, and is expected to take place in the third quarter of 2018.

Separately, Lum Chang also announced that it was acquiring a 50-per-cent stake in Malaysia-incorporated Daehan Rehabilitation Services.

It has signed a convertible loan agreement with Daehan to grant it a term loan of US$3.5 million that is convertible into new shares in Daehan representing 15 per cent of the enlarged issued share capital.

Lum Chang has also agreed to subscribe for new shares in Daehan (including the conversion shares) in three tranches which in aggregate will make up 50 per cent of the enlarged share capital of Daehan, for US$12.5 million. It has also signed a joint venture agreement with ACA Rehab Hospital, the sole existing shareholder of Daehan.

Daehan provides integrated healthcare services and specialises in rehabilitation. It plans to operate a private rehabilitation hospital at one of the blocks in Two IOI Square, IOI Resort in Putrajaya. The hospital is undergoing renovation, and is expected to begin operations in the first quarter of 2019. Due to the pre-operation expenses however, Daehan has incurred losses since its incorporation in 2016, netting loss of about RM5.57 million (S$1.9 million) for the nine months ended March 31, 2018.

Lum Chang said that it believes that the proposed investment will be a “fruitful long-term investment for the company, as there is an increasing need for specialised rehabilitation services in Malaysia”. It will fund the subscription of shares through internal cash resources and external debt.

Chip Eng Seng added one Singapore cent to finish at S$0.815, while Lum Chang added half a Singapore cent to end at S$0.345.