BOUSTEAD Holdings Bhd may have exited its education venture in the University of Nottingham in Malaysia (UNM) as part of the conglomerate’s “Re-inventing Boustead” strategy.
The strategy focuses on rationalising non-strategic assets as well as accelerating the group’s performance improvement by capitalising on emerging opportunities for value creation within existing core businesses, while at the same time ensuring it is managing costs well and maximising returns to shareholders.
This has prompted Boustead has to enter a conditional share sales agreement with the University of Nottingham, UK to release its 66.41% controlling stake and a campus in Semenyih, Selangor for £23.5 mil (RM137 mil).
On the longer term, the move by the Boustead group can perhaps be deemed as a “blessing in disguise” given that Malaysia’s ambition to be an international higher education hub has taken a back seat in the wake of the COVID-19 pandemic.
Many private universities as well as foreign branch campuses in Malaysia – already barely viable during the pre-pandemic days – are now fearing for their survival with foreign students been restricted in addition to decimating income from tuition fees.
With prolonged lockdowns, almost all universities and university colleges are incurring losses with the number technically facing financial insolvency could be as high as two-thirds to 80% of private higher-education institutions in the country, according to an estimate by Geoffrey Williams, an expert in Malaysian higher education management and finance.
Speaking to University World News, he further estimated that an estimated 97% of private universities and university colleges (not including private colleges) would make losses in 2020, up from his earlier estimate of 55% in April 2020 “when everyone was given the impression it would be a short lockdown”.
In fact, the Malaysian Association of Private Colleges and Universities (MAPCU) estimated that up to 100 or one-fifth of the 440 Malaysian private higher education institutions could close during 2020.
Campus lockdowns have forced all universities in Malaysia into online teaching with millions of ringgit and faculty hours being poured into converting traditional course material, assessments and notes into online formats as quickly as possible.
Whether this is a viable way out of the cost conundrum is left to be seen although a hybrid method (a mix of distance learning with occasional face-to-face encounter with the teaching staff) would still be the best bet anytime.
Speaking about diminishing fortune in the education sector, one can be envious of Paramount Corp Bhd for its timely – and ‘hugely’ profitable – divestment of its controlling stake in its K-12 education business for an indicative RM540.5 mil in cash on June 20, 2019 (just months before COVID-19 arrived at the Malaysian shores).
The sale entailed the disposal of the company’s majority stakes in Paramount Education Sdn Bhd, Paramount Education (Klang) Sdn Bhd and Sri KDU Sdn Bhd to Two Horses Capital Sdn Bhd.
In a Bursa Malaysia filing back then, Paramount said the sale was expected to result in a pro forma gain of RM487.81 mil – improving its earnings per share (EPS) by RM1.10 with the group distributing RM177 mil of the proceeds as dividends to shareholders within six months from the completion of the agreement.
Like Boustead, the move was strategic in nature for it allows Paramount to unlock the value of its education business with the cash raised to be used as working capital to grow its property development business’ land bank and be distributed to shareholders in the form of dividends. – Aug 18, 2021
Photo credit: MalayMail
