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ADB, Indian equity fund investing in Phinma unit

P1.62-B equity infusion in exchange for a 20.28-percent stake
/ 05:12 AM April 13, 2019

The Asian Development Bank (ADB) and India’s Kaizen Private Equity Pte. Ltd. are set to invest P1.62 billion in Phinma Education Holdings Inc. (Pehi) in exchange for a 20.28-percent stake in the latter.

This deal gives Pehi fresh funds to pursue its expansion plans here and overseas.

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In a disclosure to the Philippine Stock Exchange on Friday, Pehi’s parent conglomerate, Phinma Corp.,  said its board had approved the signing of the investment agreement with Kaizen and ADB.

Under the agreement, the new investors are entitled to two out of 11 board seats at Pehi.

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Upon the closing of the transaction, which is expected on or before Sept. 30, 2019, and  subject to the fulfillment of certain closing conditions, Phinma will remain the majority stockholder of Pehi, keeping a 68.6-percent interest.

Pehi is the holding company for Phinma’s investments in educational institutions. It owns Araullo University (AU), Cagayan de Oro College (COC), University of Pangasinan, University of Iloilo, Southwestern University and St. Jude College. It also holds a 50-percent stake in Phinma Saytanar Education Ltd. in Myanmar. It recently signed a joint venture agreement with an Indonesian partner, PT Tripersada Global Manajemen, to form Ind-Phil Management Co.

Phinma has waived its rights to subscribe to new shares in Pehi in favor of new investors.

As part of the conditions precedent of the transaction, Philippine Investment Management Inc. will exchange its shares in AU and COC for a 9.06-percent stake in Pehi.

Kaizen is India’s first private equity fund that is focused on this country’s education sector.

The Phinma group plans to expand its footprint in Southeast Asia’s education space by transforming its pilot nursing and healthcare training center in Myanmar into a full college while expanding in other markets such as Vietnam and Indonesia. This will be implemented while expanding its business in the Philippines organically and through more acquisitions.

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TAGS: ADB, Asian development bank, Indian, Phinma unit
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