Essential reading for education companies worldwide
Remember me:
Skip Navigation LinksEI article
Baby boomers

A recent half-day conference hosted by this publication in Singapore shone a light on Southeast Asia’s buoyant early years market, while helping both prospective and incumbent players avoid sectoral snares, writes Josh O’Neill

A compelling growth story is being penned in Southeast Asia’s early years market, as a swelling wave of institutional investment is spurring consolidation while simultaneously bankrolling operational expansions, experts told a recent EducationInvestor Global conference. 

On 28 February, the publisher of this title hosted its first half-day seminar in Singapore focused on the ASEAN early years market, offering in-depth analysis and insight to sectoral leaders in a bite-sized format. Building Generation Next, hosted at the esteemed Pan Pacific hotel situated at the heart of Marina Bay and Singapore’s central business district, welcomed more than 50 delegates comprising a mix of operators, investors and advisors, all of whom drew on wide-ranging expertise on how to exploit a burgeoning range of opportunities across an expansive market.

Dr T Chandroo, chairman and chief executive of nursery giant Modern Montessori International, kicked off the afternoon seminar with a keynote speech on Investing in the Future. Reflecting on the invaluable experiences he gleaned while building an empire of nurseries with more than 100 sites, Chandroo, who began his career as an encyclopedia salesman, told the audience that he transplanted the brand from the UK into Singapore in 1989. Then, in 1994, he began to utilise franchise arrangements “to accelerate growth,” he said, explaining how his organisation today is a meld of franchises and corporate-owned businesses. He told operators that “as you expand, it’s always good to invest in assets”, suggesting that a $10 million investment in today’s market could be realised for more than four-times that in years to come. 

He warned, however, that “today’s success is tomorrow’s failure”, adding: “We can’t just rest on our laurels.”

Chandroo said that he was bullish on Vietnam, Indonesia and Myanmar, three markets which showcase “great potential”. With regards to his own firm, it recently hired PwC “to help corporatise the group,” he said, adding that it is weighing a flotation or private equity buyout two to four years from now. 

The state we’re in
Next, Amitabh Jhingan, partner and head of event sponsor EY-Parthenon’s education centre of excellence, delivered a market overview presentation in an effort to answer the question: How mature is the early years market? In short: not very. “It’s still very early and there’s huge runway for organised providers to expand,” he said, while behind him a series of infographics illustrated the varying points of market maturity. Across the ASEAN region, “activity will be centred on 10 to 12 cities,” he said, noting a “disparity in income levels” while predicting that “winners will focus on the mid-priced bilingual schools” as “English is central to what parents are looking for”. 

Across Southeast Asia, strong government and local support allows providers to tap into markets at lower price points, Jhingan explained, saying that operators are being boosted by a “first wave of institutional investment”. And although “there can be challenges around pricing, there continue to be benefits of scale,” he added. However, operators and investors “have to drive decision-making through data, because analytics are so important,” he said.

“There is very visible headroom for growth, and there are some nations where growth opportunities are significant,” Jhingan summarised. 

Work experience 
Following Jhingan’s presentation, an engaging one-on-one interview with Anriuddh Gupta, founder and CEO of Quantm Education, peeled back the operational layers of a premium international early years organisation while at the same time drawing parallels between his former 14-year career as an investment banker. “As an investment banker, you get used to working in multiple regions with different regulatory regimes,” he said, which helped him navigate some of Southeast Asia’s complex legislative landscapes. Still, “maintaining the brand across regions is one of the biggest challenges” he faces, and, consequently, he has “worked hard on [internal] processes and standardising quality control,” he said, all while tailoring marketing and brand-building efforts to local markets. Early years “is such a hyper-local business,” he said. “It is difficult to quantify how you approach culture, but essential.” Quantm Education “only goes into markets where we can see scale or a very strong strategic reason, such as access to China,” said Gupta. “Know why you’re expanding and go from there.” Gupta deftly poses as a parent and attends around 100 sites in a city before launching there, he said, in order to scope out his prospect competition and to gauge market maturity levels.

Industry beacons 
After a networking break, your correspondent took the stage alongside panellists Connie Seah-Lim, chief executive of Singapore’s Agape Little Uni; Jacqueline So, co-founder and chief executive of Malvern College International (Asia-Pacific); and Ai Ling Thian, general manager of NTUC First Campus’s Singapore operation. The conversation united both domestic and international voices to explore operational trends and forward-thinking strategies. 

So, who spearheaded the launch of UK-based Malvern College’s latest pre-school operation in Hong Kong, talked about the necessary challenge of balancing tradition and innovation across her group’s offerings. “Being traditional is about the values – resilience, risk-taking – and they need to be fundamental pillars of your success… while trying to balance what we’ve always done successfully with innovating,” she said. 

“The world has moved on since the teachers were in school, so we must consider what we can do to partner with complementary organisations. Teachers can, therefore, develop and become more skillful, so that we all progress.”

Thian – whose organisation is, although, very different to Malvern’s – echoed So’s approach around partnering with compatible companies. Explaining that her firm’s largest centre caters to around 1,000 children, Thian said: “We always consider what will be our value proposition, as opposed to just being larger. So, we work with experts in other areas, for instance the National Arts Centre”, to leverage additional expertise and deliver more bespoke early years education.

Seah-Lim told the audience about the need to diversify children’s early education in order to future-proof them for working life. “When you’re in today’s work environment, you need a holistic education, otherwise you can break down. We send kids to the forest, we let them code, learn about robotics. We want to be innovative, because kids will face challenges that we can’t imagine right now.”

Investing in generation next 
Last, but certainly not least, Sandeep Aneja, managing partner at Kaizen Private Equity, joined your correspondent on stage for a one-on-one interview to round off the seminar. 

Asked what he considers the most important factors when weighing investment into education-focused companies, Aneja said: “We think hard about finding solutions to problems – you really need to figure out the ‘why’. We always want to be able to see a strong starting point for a company; we don’t want a hammer looking for a nail. If you figure out what the solution should be, then the journey is very easy. 

“What distinguishes a great company is getting that right from the outset.”

Aneja stressed the importance of preparing company owners for an exit early on in the investment process to ensure transitions run as smoothly as possible. “The founder needs to be aligned with the reality of an exit,” he said. “They should meet the potential buyers of their company. They also need to be able to drive ownership down through an organisation, otherwise it can only be a lifestyle business.”

Turning his focus to regions, Aneja said he was “still excited by Singapore, because of the quality regulations” around early years offerings. “Not every business will succeed,” he said, “but that’s good because it drives quality. It’s a critical test-bed. But this market cannot allow you to become a $500 million business – you need to be able to tap into the larger markets. You can test yourselves for quality and then scale across the [Southeast Asian] region.”

Posted on: 01/04/2019

Latest news

Risk Strategieshas acquired Gerard B Tracy Associates, which creates employee benefits programmes, with a special focus on higher education institutions.
Guangzhou-based internet firm, NetEase is planning to list its ed tech online education brand, Youdao, in the US, seeking a valuation of about $2 billion.
Brazilian medical education group Afya Educacional is listing on the Nasdaq, with the initial public offering of 13,744,210 Class A common shares priced at $19 per share.
Substitute staff provider for K12 schools EES has acquired Enriched Schools, which provides substitute staffing services to US charter schools.
Orbital Education has signed a joint venture agreement with Qatari public company UDC to found and operate a British style international school in Doha, Qatar.
American Campus Communities today announced second quarter net income of $10.2 million, down from $46 million in the second quarter of 2018.
New Oriental Education & Technology Group, a large private educational services provider in China, today announced net income of $227.8 million for its 2019 fiscal year.
International and bilingual K12 school operator Bright Scholar Education Holdings has announced net income of ¥137.4 million (£16.1 million) for the third quarter of its 2019 fiscal year.
The National Fostering Agency (NFA), which is owned by private equity group Stirling Square Capital Partners, is on the cusp of acquiring specialist educational needs group Outcomes First from Sovereign Capital Partners, EducationInvestor Global can exclusively reveal.
Milan-based Life Based Value has secured £1.3 million in funding in a round led by Impact Ventures from Hungary.

Middle East | Dubai SEN regulations

Consultant Beatrice Cernuta spent four years launching special needs settings in Dubai before returning to EY-Parthenon. She speaks with Josh O'Neill about how the emirate’s private schools should approach new regulations requiring them to cater to special needs students by 2020

my images

Europe | UK early years

A co-founder of Nord Anglia plans to rapidly scale his UK-based early years business Just Childcare, but he won't be casting a net into international waters anytime soon, he tells Josh O'Neill