Developing Asia has a thirst for quality private education, with institutions in the U.S., Europe and Australia among the most desirable. In September 2006 CHAMP Private Equity bought Study Group, a leading provider of higher education for international students, from DMG International for US$180m.2 At the time, Study Group had 35,000 students at 23 centers in Australia, the UK, U.S., New Zealand and Canada.3
CHAMP invested in the business and backed management to open new facilities, including 17 international study centers which saw an increase in student numbers to 55,000.4 Two add-on acquisitions were also completed. Over the next four years profits tripled and in 2010 CHAMP explored exit options, including an IPO, before the business was sold to Providence Equity Partners for US$673m.5 CHAMP investors benefited from a developed market from an operational and governance perspective and exposure to fast growing markets in Asia. CHAMP’s investment in Study Group resulted in an IRR of over 55 percent and a five times return of capital invested.
The development of Loscam into a regional leader in the returnable pallet and packaging distribution business shows how returns can be generated by directly tapping into Asian markets.
Affinity Equity Partners bought Loscam from DB Capital Partners for about US$255m in August 2005, when the company had a 25–30 percent market share in Australia6. The growth strategy was to work with global consumer goods groups, including Proctor & Gamble, Unilever, Nestle and Colgate7 and retailers, including Tesco, Big C, Makro, Carrefour, Park’n Shop, Wellcome and Matahari, to create new markets across Asia. Loscam now has operations in China, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
In June 2010 Loscam was bought by China Merchants Group (CMG) of Hong Kong, the world’s largest shipping container manufacturer, for US$612m8. CMG’s offer was preferred to a tertiary sale to PE and an IPO.9
1UN World Development Index 2010
2CHAMP Press Release, September 2006 (using current exchange rates)
3CHAMP Press Release, September 2006 (using current exchange rates)
4Study Group.com, October 2011
5Study Group.com, October 2011
6Financial Times, 28 January 2010 (using current exhange rates)
7Pallet Enterprise, January 2007
8Reuters, June 4, 2010 (using current exchange rates)
9Reuters, June 4, 2010 (using current exchange rates)