PHINMA Education Holdings, Inc. (PEHI) continues to consider an initial public offering (IPO) as a potential funding option but is delaying the move due to soft market conditions and the availability of private investment.
鈥淭he market is really soft, so it may not be a conducive time for us to raise the money. Secondly, we still receive interest from private investors. So that tells us that we can get better valuations from private equity investors. Thirdly, we have yet to fully deploy the funds that we receive from KKR,鈥 PHINMA Corp. Vice-President and Treasurer Nanette P. Villalobos said at a briefing last week.
鈥淲e鈥檙e focusing our efforts on deploying and putting that investment to good use. We are scheduled to receive the balance of the KKR investments, I believe, next year. So we still have funds at this point and don鈥檛 see the need to go for an IPO right now,鈥 she added.
In August, PEHI secured a P825-million investment from Rise Edu Pte. Ltd., an investment vehicle managed by the education-focused private equity fund Kaizenvest III. The remittance, received on Aug. 13, is part of an investment agreement signed last May by PHINMA Education, Kaizenvest III, and Phoenix Investments II Pte. Ltd.
The agreement鈥檚 primary transaction involved the issuance of P4.5 billion in new PHINMA Education shares. Under the secondary transaction, KKR-managed funds purchased all PHINMA Education shares previously held by the Asian Development Bank, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V., and Kaizen Private Equity II Pte. Ltd., which had invested in the company in 2019.
Following the P825-million remittance from Kaizenvest III and the P2.52 billion received from KKR in October last year, PHINMA Education now holds 75% of the total investment.
PHINMA Chief Financial Officer EJ A. Qua Hiansen said that the partnership with KKR goes beyond financial support. 鈥淭here was also a large strategic benefit that KKR brought. As I mentioned, we do like bringing in partners for other reasons, beyond just the financial, because they can really help us grow the business.鈥
PHINMA Senior Portfolio Manager Andre F. Ramirez highlighted KKR鈥檚 active role in initiatives to improve student outcomes. 鈥淚 think one of the key strengths with the partnership with KKR [is] we have a lot of open dialogue with them and they have been crucial in actually a lot of the things we鈥檝e been doing in terms of building up our capabilities, especially since they鈥檝e come in.鈥
鈥淲hat we want to do is we really want to improve the survival rate of our students. Because right now, for every batch that comes in, only about 30%-40% of them actually graduate. So, we鈥檙e losing about 60% of our students through the time. And we鈥檙e really focusing on fixing that and then trying to raise that number so that we can get more students through the door, to their diplomas, to the jobs that are out there, and really create that social mobility. I think that they鈥檝e been crucial in figuring out how to tackle these things, how to take a look at it from different angles, and giving us strategic support to do what we need to do in terms of that,鈥 he said.
PHINMA shares were last traded on Nov. 19, unchanged at P16.38 per share. 鈥 Alexandria Grace C. Magno
