CONGLOMERATE Phinma Corp. is set to spin off its education business into an independent subsidiary in preparation for further expansion and a potential stock market debut by 2017.
In a disclosure to the Philippine Stock Exchange on Friday, Phinma said it was set to infuse P2 billion into the soon-to-be-incorporated education holding company Phinma Education Inc.
The funds will be used by the new company to buy the shares of the parent firm in the chain of schools operated by the group, Phinma Education Network president Chito Salazar said in an interview.
“The management demands are getting bigger,” Salazar said, adding that it was now necessary to set up the education business as a separate group. This will also allow the unit to raise its own funds for expansion in the future.
“We do have interest to become a vehicle for fund-raising, whether through debt or IPO (initial public offering),” Salazar said.
For a stock market debut, Salazar said the earliest this would be done would be in 2017. By that time, he said, there would already be clearer progress on the implementation of the K to 12 program.
The K to 12 education program requires at least one year of kindergarten education, six years of elementary education and six years of secondary education. Secondary education now includes four years of junior high and two years of senior high school education. The first batch of students covered by the K to 12 program consists of Grade 1 and high school freshmen students in school year 2012-2013.
Salazar said Phinma’s education unit, with its 52,000 student population, had reached the critical mass needed to attract equity investors.
He said that other listed education institutions such as Far Eastern University and Centro Escolar University currently had around 20,000 to 25,000 students.
“We think there’s a lot of interest in our business,” Salazar said, noting inquiries received by the unit.
He, however, said the education unit was not eager to list on the stock market right away until the K-12 overhang was resolved. Once this was transcended, he said going public would be a question of need—if it needs fresh capital for a big acquisition or expansion—or timing.
Phinma now has five tertiary institutions in its portfolio with the following student breakdown: University of Pangasinan (10,000-12,000), Araullo University (8,000-9,000), Cagayan de Oro College (12,000), University of Iloilo (10,000-11,000) and Southwestern University (9,000-10,000).
The P2-billion initial capital infusion by parent conglomerate will allow the new unit to absorb the first four universities under the Phinma group.
The group’s newest acquisition, Southwestern University in Cebu, will be folded into the new unit later this year and at a separate valuation.
Phinma group is expected to generate about P1.6 billion in revenue the school year ending March 2016.
Last fiscal year’s revenue breached P1 billion with the first four schools in its network.
The group expects cumulative revenue to grow by at least 10 percent this year.
Southwestern University, which was acquired in April this year, is seen to contribute P400 million to P500 million.
The group is also set to open a chain of campuses offering senior high school education with specialized academic programs under the K to 12 framework.
The new education venture Career Academy Asia Corp. is in partnership with Singaporean schools on the academic program for art/design and hospitality.