MindChamps becomes first pre-school operator here to launch IPO

SINGAPORE — In a sign of the booming early childhood education industry in Singapore and the rest of Asia, MindChamps — the largest pre-school operator in the Republic by market share — launched its initial public offering (IPO) on Friday (Nov 17).

The company, which was founded almost two decades ago, is the first pre-school operator here to be listed on the Singapore exchange. It is offering more than 30.4 million shares at S$0.83 each. This values the company at S$200.5 million.

The offering will open 9am on Saturday, and close at noon on Wednesday. The shares are expected to commence trading next Friday.

Last month, MindChamps, which provides “premium academic and enrichment programmes”, signed agreements with investment firms China First Capital Group and Hillhouse Capital ahead of its IPO.

MindChamps CEO David Chiem said the public listing would allow the company to “expand from Singapore to the rest of the world”. “We are confident that MindChamps is well-positioned to capture growth of the early childhood education industry globally,” he said.

As at Oct 30, MindChamps has sold a total of 109 licences under unit franchise agreements and master franchise arrangements. Its preschool franchise licence fees in Singapore have increased from S$55,000 in 2008 to S$150,000 - which is “an endorsement by the market of the value of the MindChamps franchise”, the company said.

Going forward, its growth strategies include growing its business via mergers and acquistitions, joint ventures and partnerships. It also seeks to expand its franchise business overseas. and product offerings.

Its cornerstone investors CFCG Investment Partners, Hillhouse Funds and Target Asset Management will subscribe for almost 29 million shares.

Assuming the over-allotment option is not exercised, the offering will raise S$49.3 million of gross proceeds from both the IPO and the cornerstone placement, of which about S$47.6 million will be due to the company. It intends to use the net proceeds to partially repay an outstanding acquisition loan, and fund expansion plans, among other things.

CMC Markets analyst Margaret Yang noted that the Mindchamps IPO has secured “strong cornerstone commitments”, and it might attract good demand from retail investors “due to the scarcity of its underlying business and limited supply of shares”.

Dr David Kuo, chief executive officer of The Motley Fool Singapore, said the demand for education in Asia “should not be underestimated”. He noted that the Government has pledged to double spending on the pre-school sector to S$1.7 billion.

“When demand exceeds supply, it could mean that providers can charge a premium for their services. However, the introduction of more government-aided schools could crowd out some existing providers,” said Dr Kuo.

Currently, two other education companies are listed on the SGX: Raffles Education Corporation and Overseas Education. On the outlook for education counters, Dr Kuo said that “neither of which has been exceptional performers”. “With an already outstanding crop of schools in Singapore, private educators need to differentiate their products and services adequately to justify higher fees as labour costs rise,” he said. ADDITIONAL REPORTING BY ANGELA TENG