ARCH invests in Chinese university

The quoted China-focused private equity company has invested $71m in a university in Shaanxi, in recognition of the growing demand for tertiary education in the country.

ARC Capital Holdings (ARCH), an AIM-listed investment company, is acquiring a 45 percent stake in a private university in Shaanxi, China for $71 million (€45 million). The close of the transaction is subject to regulatory approvals. The name of the university has not been disclosed.

The investment is ARCH’s second in the Chinese education sector, following a $42 million investment in a private college in Beijing last November.

According to the China Statistics Yearbook 2005, only 6 percent of people between the ages 25 to 34 have completed higher education in China, as opposed to about 27 percent in OECD countries, the firm said in a statement.

The growth potential for tertiary level education in China is large given the country's rapid economic development, increased income levels, and a growing demand for professional skills in the country.

Allan Liu, managing partner of ARC Capital Partners, said in a statement: “This second investment in the rapidly growing tertiary education sector demonstrates ARCH’s commitment to sourcing new and innovative niche investment opportunities that harness the domestic growth potential of the China market.”

The firm said that in the coming months, it is looking to take stakes in private sector colleges and universities provided they can be listed either on the Shanghai and Shenzhen stock exchanges, or overseas.

ARCH is a $583.8 million fund that makes investments in the retail and consumer-driven sectors and while its investments are focused on China, it also does deals in neighbouring Asian countries.

It was listed on the AIM in June 2006 and is managed by ARC Capital Partners, a subsidiary of Pacific Alliance, an Asian alternative investment manager headquartered in Hong Kong.

ARC Capital Partners could not be immediately reached for comment.