Private equity firm CVC Capital Partners is investing over US$200 million into EIC Group, one of the world’s largest education consultancies for Chinese student recruitment, according to a Reuters report citing two as yet unnamed industry sources.
Market conditions have led to a trend for buyouts where business owners have sold shares – and relinquished some control over the company – to incoming investors
CVC reportedly bought shares from EIC founder Joe Li, who set up the company in 2000. They also bought shares from rival private equity company Actis Capital, giving it greater managerial influence over the agency than Actis, which bought a minority stake in EIC in 2011 for an undisclosed price.
Actis has also invested in Ambow Education Holding Ltd, an educational and career enhancement services provider in China, but this is the first education investment made by CVC.
EIC has 20 offices worldwide and operates in 43 countries, and claims to run the “best attended, most effective” recruitment fairs in China.
It has formal partnerships with 538 institutions, including 42 of the world’s top 200 universities: 50,000 students and their families attended their 2012 China Education Expo – a series of 51 events across China’s key education markets.
Although an initial public offering (IPO) or stock market launch is generally the preferred option for owners of SMEs in China looking to sell shares as it generates higher revenues, market conditions have led to a trend for buyouts where business owners have sold their shares – and relinquished some of their control over the company – to incoming investors.
This is due partly to long waits for public listings, following the end of a 15-month freeze on IPOs by the securities regulator. Stricter regulations for offerings in China, a difficult public market in Hong Kong and tighter credit conditions make it easier for private equity firms to persuade business owners to sell a controlling stake in the company, Reuters reports.
