Going Global in Full Gear under the Dual Strategy of “Education Investment Plus Financial Services”
HONG KONG — China First Capital Group Limited (“CFCG” or the “Group”; stock code: 1269), has announced its annual results for the year ended 31 December 2016. In 2016, the Group recorded revenue of RMB1,479 million, while profit for the year amounted to RMB179 million. Basic earnings per share were RMB0.27. As of the end of 2016, the total assets of the Group was RMB7,266 million, representing a 2.8-times increase compared to the beginning of the year, while net assets were RMB3,036 million, representing a three-times increase compared to the beginning of the year.
In 2016, the Group spared no effort and joined forces with strong partners. The Group has kept abreast of the market trends in the year to better grasp new investment opportunities in the education industry. By actively exploring domestic and international investment channels and identifying quality projects, the Group has benefitted from its pioneering initiative to invest in the education sector, optimizing its financial services structure in order to build a blueprint of education investment and financial services for future development.
According to research conducted by the internationally renowned education consulting firm Parthenon-EY; education is the eighth pillar industry of the global economy. China is the world’s second largest spender on private education after the U.S. Key segments of the private education market in China have a potential market size value of US$28 billion, and will grow at an annual rate of more than 10%. CFCG seeks to tap such tremendous opportunities, and has been engaging primarily in the education investment business in the past year. With the support of its financial services units, it has established an operation, investment and financing platform in the education sector that has driven “Education Investment + Financial Services.”
CFCG entered into a number of acquisition agreements in 2016, enabling it to acquire a 51% interest of Jinan Shijiyinghua Experiment School, a K-12 high-end education provider; a 70% interest of Kunming Professional College of Arts, specializing in cultivating talents in music and performing arts; and a 58.3% interest of Xishan School, focusing on football and martial arts. CFCG holds approximately 1.25 million shares of Virscend Education Company Limited, Southwest China’s largest private K-12 education service provider. Meanwhile, First Capital Fund Management Company Limited (“FC Fund”) joined hands with Guolian Trust Co., Ltd, and Central China Asset Management Co., Ltd. in launching various education investment and M&A funds to invest in a number of educational projects, including Bojun Education, which operates secondary schools and kindergartens in Chengdu; Baishu Education, which operates primary, secondary schools and kindergartens in Jiangxi Province; Meten International Education, which provides professional English training; and Beijing Experimental Foreign Language School, which provides international and interdisciplinary courses with Chinese characteristics and international courses, covering multiple segments of the education sector. In addition, the Group has signed a strategic cooperation framework agreement with the government of Deyang City, Sichuan Province to co-establish the China (Deyang) Splendid Horizons International Education New Town (formerly known as “International Education New Town of Western China”). The project aims at building a liveable educational city for world-class talents from China and beyond. In addition, the Group has also signed a strategic cooperation framework agreement with the Education Department of Jiangxi Province to promote innovation and development of the local education industry.
In the international education field, the Group has sought collaboration opportunities and formulated global education investment strategies by entering into a collaboration agreement with Kingswood School, a renowned British school, to set up joint international schools under the “Kingswood” brand in the PRC. CFCG has also invested in and become a limited partner of GSV Acceleration Fund I, L.P. (“GSV Fund”), while also exploring the possibilities and beginning collaboration with renowned foreign educational institutions, including Churchill College Moller Centre of the University of Cambridge, University of West London, Singapore Raffles Music College and the Altschool, a school designed in futuristic style, in an effort to build a systematic presence in the global education market.
The Group’s financial services business experienced rapid growth alongside the education investment business at full speed in 2016. Licenses have enabled the three financial services companies in Hong Kong under the Group, namely First Capital Securities, First Capital Asset Management, and First Capital International Finance, to operate effectively and consolidate the Group’s advantage as a “fully-licenced” financial service provider, offering comprehensive financial services to customers. First Capital Securities, in less than a year after opening, was already a joint bookrunner and joint lead manager of Human Health Holdings Limited (stock code: 1419), China Golden Classic Group Limited (stock code: 8281) and Postage Savings Bank of China Co., Ltd (stock code: 1658). In addition, the application for qualified foreign limited partner (the “QFLP”) of First Capital Asset Management was approved by the Shenzhen Municipal Government Financial Services Office, and it may convert foreign capital into RMB capital in order to invest in private equity funds and the venture capital market in the PRC First China International Finance successfully obtained an SFC license to engage in Type 6 (advising on corporate finance) regulated activities in October 2016.
Education is a long-term investment. Post-investment management is the key to adding value to projects and an integral element in diversifying the entire industry chain and building an education investment platform with a Chinese perspective. The Group has therefore focused on intensifying associated efforts over the past year, which includes formulating and implementing strategies for post-investment management and integration of education resources. Such strategies help maximizing synergies generated among the Group’s projects in terms of courses, technology, brand, finance and management, as well as enhance the overall value of education projects.
Looking ahead, the Group will continue to grasp market opportunities and explore investment opportunities in the education sector by keeping an eye on the global education market and focusing on education segments which follow the mainstream education development trends. The Group will also focus on enhancing the post-investment management of its investment projects and honor all cooperation agreements or framework agreements that it has entered into, as well as facilitate the infrastructure planning and implementation of the China (Deyang) Splendid Horizons International Education New Town, promote the establishment of international schools under the Kingswood brand, and hold worldwide education/investment summits. By integrating educational resources with the advantages of its financial “full-licensed” capabilities, the Group will continue to explore investment opportunities in the education sector and invest in educational projects with high potential in the domestic and overseas markets to enhance the value of its educational projects and build an internationally-renowned brand. In this way it can create attractive returns for its shareholders while identifying more quality education projects in China and the rest of the world.
Dr. Wilson Sea, Chairman and Executive Director of CFCG concluded, “At present, the demand for private education is growing huge but the concentration is rather low. Yet, the revenue generated from this sector is expected to be stable. Now is the opportune time to explore investment opportunities in the field of education, given the higher entry barrier for new entrants and the prospects for development are bright. Going forward, the Group will focus on the integration of high-end quality education resources, and continue to acquire and cooperate with educational brands and resources with a long accumulated history. We will also introduce their resources and business models to China in order to accommodate the huge local demand. Through these efforts, CFCG is poised to becoming the world’s leading education investment and operations company.”