KUALA LUMPUR: Paramount Corporation Bhd
is selling its education business to Two Horses Capital Sdn Bhd which is owned by Tunku Ali Redhauddin and Datuk Ganendran Sarvananthan.
The property-education company announced on Thursday it was selling its equity interests in Paramount Education Sdn Bhd, Paramount Education (Klang) Sdn Bhd and Sri KDU Sdn Bhd (target companies) for cash consideration of RM540.50mil.
The stakes are 69.7% interest in Paramount Education Sdn Bhd for RM134.5mil, 80% in Paramount Education (Klang) for RM21mil and 80% in Sri KDU for RM385mil.
TPG Capital Asia, the Asian investment platform of global alternative asset firm TPG, will provide financing to the strategic investor as well as strategic and operational support, including leveraging on its network and experience in the education sphere.
Paramount said the indicative disposal consideration was based on the earnings before interest, tax, depreciation and amortisation (Ebitda) of the target companies and REAL Education for the FYE 31 Dec 2018 of RM53.8mil and multiplied by an agreed multiple of 16.0 times.
“This will result in an implied enterprise value (EV) of RM861.0mil for a 100%-equity stake in the target companies and REAL Education,” it said.
Paramount said the disposals would enable it to monetise and unlock the value of part of its investments in the Paramount pre-tertiary group at an attractive valuation which is comparable to regional education service providers operating in developed markets.
“The EV/Ebitda multiple of 16 times is above the average EV/Ebitda multiples of the comparable companies and Paramount Group’s EV/Ebitda multiple of 9.7 times based on its audited financial statements for the FYE 31 December 2018, making the proposed disposal value accretive to shareholders,” it said.
Paramount said it would realise pro forma gain on disposal of approximately RM487.8mil, which will translate into an improvement in earnings per share of the company by RM1.10 per share.
"The corporate exercise would enhance the brand visibility of the Paramount pre-tertiary group regionally as Tunku Ali and Ganen have extensive regional business networks through their involvement in TPG as adviser and managing partner respectively.
“TPG has extensive investment experience in the education sector which the Paramount pre-tertiary group can leverage on to elevate its growth to the next level,” it said.
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