London-listed Myanmar Strategic Holdings is to acquire Wall Street English Vietnam from Verlinvest, despite the financial havoc that Covid-19 pandemic has wreaked on English-language tuition (ELT) providers globally.

The firm announced today that it had exchanged contracts to take control of WSE Vietnam from Verlinvest, a private investment firm which owned the business through A-Star-Education, a platform for which it provided seed capital.

The deal will see Verlinvest re-invest $4 million into WSE Vietnam’s holding company, which also owns Wall Street English Myanmar, after becoming convinced “of the long-term potential of Myanmar Strategic Holdings”, said Raphael Thiolon, executive director of Verlinvest.

WSE Vietnam, which in the 12 months ending 30 April 2020 generated nearly $14 million in revenue but lost $1.4 million, is a franchisee of Wall Street English, which is owned by Baring Private Equity Asia and CITIC. The organisation announced last month that it would wind down its China operations because of the fallout from Covid-19, which earlier this year caused centre-based education providers to close for often indefinite periods of time.

Myanmar Strategic Holdings said that its purchase of WSE Vietnam will see the firm’s centres continue to operate under 10-year franchise agreements made with Wall Street English, the terms of which are “similar” to those in place for WSE Myanmar. As of 30 April 2020, WSE Vietnam, which focuses on the “premium” market segment, enrolled more than 6,000 students at seven centres in Ho Chi Minh and Binh Dhuong.

Myanmar Strategic Holdings said that the acquisition will involve a “nominal consideration” payable in cash, plus the assumption of certain liabilities, including “a commitment to service the existing WSE Vietnam students”.

The deal is expected to complete by July, subject to regulatory approvals.

Alain Thibault, chief operating officer of Myanmar Strategic Holdings and chief executive of WSE Myanmar, described the acquisition as “a tremendous opportunity to generate operational synergies and leverage the competencies we have developed over the years” since investing in WSE Myanmar in 2017.

“We expect a seamless transition and significant economies of scale and expertise across several areas such as digital transformation, lead acquisition and localised content creation strategies, process-driven innovation and business intelligence,” he said.

News of the transaction has come at a testing time for the global ELT sector, whose primary delivery model involving in-person instruction has been upended by the worst pandemic in generations, which in effect has shut down vast swathes of global economies.

Chris Eden, vice-president of franchising at rival ELT provider Berlitz Corporation, said: “I think we’ll see a lot more of this kind of consolidation among the franchise chains as this crisis wears on. We have one franchisee that has taken 12 territories in the past 18 months.”

Anip Sharma, partner at L.E.K. Consulting’s global education practice, noted that the deal marked Myanmar Strategic Holdings’ “first foray” into Vietnam, at a time when ELT providers have “come under pressure due to extended periods of closure”.

He said that WSE Vietnam was one of the country’s “leading providers” of ELT in a country that “is one of the most attractive ELT markets in Southeast Asia and is poised for rapid growth in the future”.

Sharma stressed, however, that adult ELT is “susceptible to online disruption”, much of which has been evidenced since the Covid-19 pandemic began to unfold in January, and this has been seen in more mature markets, like China.

Nevertheless, in an environment that has not yet seen “intense competition”, WSE Vietnam has “runway for growth”, he said, “to rapidly expand its footprint across Vietnam and embed strong technology-enabled delivery in its pedagogy to build a moat against disruption”.

Sharma added: “We continue to remain bullish on the long-term prospects of adult ELT, as better proficiency in English paves the way for better job opportunities in markets like Vietnam.”

Vietnam has recorded no deaths related to Covid-19. 

Date published: 26 May 2020

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