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MindChamps to set up JV fund which will acquire preschools in the GCC
MINDCHAMPS PreSchool has entered into a joint venture (JV) with global investment firm Foundation Corporation to establish a fund which will acquire preschools in the Gulf Cooperation Council (GCC) countries and operate them under the MindChamps brand.
Called the GCC PreSchool Fund, the fund will seek to raise an initial tranche of around US$50 million to US$100 million from the offering and sale of limited partnership interests to the fund's limited partners.
It is also intended to have an initial term of six years, the preschool operator said in a regulatory filing on Monday.
These limited partners are understood to comprise mainly third-party investors, but also MindChamps and Foundation, both of which may invest directly or indirectly.
In addition, a licensed fund manager will also be appointed for the GCC PreSchool Fund in relation to such fundraising.
The fund will also be established as an exempted limited partnership in the Cayman Islands. It will be managed by a general partner to be jointly incorporated by MindChamps and Foundation.
It will have an initial share capital of US$1 million, with MindChamps owning 50 per cent and Foundation owning the remaining half.
The general partner will receive recurring management fees from the fund as well as "carried interest" depending on the fund's performance. MindChamps will receive profits from the general partner's operations based on its 50 per cent shareholding.
MindChamps and Foundation will also incorporate a new company which will be appointed as a master franchisee of MindChamps in the GCC.
This company will facilitate the operation, training and upgrading of newly established or acquired preschools under the MindChamps brand in the GCC. It will also acquire an initial 30 unit franchises from MindChamps for resale and application to preschools owned by the GCC PreSchool Fund.
The new company will be incorporated in a mutually agreed GCC jurisdiction and have an initial share capital of US$4 million, with MindChamps and Foundation each owning half of the issued share capital.
MindChamps will receive licence fees, royalties and profit from the operations of the master franchisee company based on its 50 per cent shareholding. It will also receive royalties from franchised preschools and returns from investment in the GCC PreSchool Fund.
Mainboard-listed MindChamps shares closed flat at S$0.24 last Friday.