China Education Group, the Hong Kong-listed entity which earlier this year bought a British university, is to acquire a 60% stake in two Chinese higher education institutions for $195 million.

According to an announcement, China Education Group has agreed to buy the holding from shareholders in Haikou University of Economics and the affiliated Art School of Haikou University of Economics in Hainan, in South China.

The transaction – described by the organisation as “the largest-ever in the Chinese higher education industry” – will expand China Education Group’s revenue by around 30%, it said, and lift its number of enrolled students to around 230,000.  

Shares in China Education Group – which is up 53% year-to-date despite being a centre-based provider amid the Covid-19 pandemic – climbed 6% on the announcement before dipping to HK$15.52.

With 42,000 students, Haikou University of Economics is the largest private institution of its kind in Hainan, while the Affiliated Art School, a vocational college, has 1,500 students.

Vocational training is one of the most lightly regulated educational sub-sectors in China and investors in it consequently enjoy less stringent restrictions around curricula, operations and fundraising.

The acquisition by China Education Group comes four months after it bought Richmond, The American International University in London, sparing the cash-strapped institution from bankruptcy after its wealthy benefactor died in 2018.

China Education Group also owns six universities and three vocational colleges in China, as well as a university in Sydney, Australia.

Last year, Haikou University of Economics recorded net profit of $6.4 million, down nearly 40% on the year prior.

In a statement, China Education Group said: “The board believes that the acquisitions will be complementary to the group’s existing school network. The acquisitions will enable the group to expand its portfolio, especially in the Hainan region.”

In June, the China’s state council announced favourable policies designed to encourage investment through tax incentives and other measures would be applied to a special economic zone in Hainan.

In terms of educational quality, Haikou University of Economics is ranked first in Hainan and fourth in China by the Chinese Academy of Management Science.

Date published: 13 August 2020

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