Capvent books 2.9x on Tsingda exit

The Zurich-headquartered investment firm had quadrupled Tsingda’s revenues up to $197 million in 2015.

Capvent has exited its investment in Chinese online education company Tsingda eEdu Corporation, generating a return multiple of 2.9x and an internal rate of return of 32 percent, the firm said.

It bought Tsingda in 2011 for $41 million through Capvent Asia Consumer Fund II, a 2012-vintage vehicle that raised $75 million. That fund is almost fully invested, according to Varun Sood, managing partner and founder at Capvent and UC Capital.

In January 2016, another investor in Tsingda, Asia-focused private equity firm RRJ Capital sold its almost 20 percent stake in the company to an undisclosed Chinese enterprise, making a 3x return on its investment. In the same month, the Overseas Chinese Banking Corporation’s (OCBC) mezzanine capital unit, which made an investment in Tsingda in 2014, had also sold its stake for $60 million, securing nearly 3x returns.

Sood told Private Equity International that since Capvent’s investment, Tsingda’s revenues have grown fourfold, from $41 million in 2011 to $197 million in 2015.

Tsingda offers online learning, after-school tutoring programmes and counselling for kindergarten to high school students across China. The company filed in 2011 to list on the New York Stock Exchange, now renamed NYSE MKT, but withdrew the application in December 2014 amid market volatility.

Alongside Capvent Asia Consumer Fund II, the firm also manages Capvent India Private Equity, a 2009-vehicle that invests in energy, industrials, consumer staples and healthcare companies in India.

Capvent has raised and invested over €1.2 billion over the last 15 years in Asia. In recent years, the firm has expanded its approach to invest directly in European companies that wish to target Asian markets.

Sood said the firm won't be fundraising anytime soon as it wishes to focus on this new investment approach.

He said the firm will target investments in India, combining European management with Indian manufacturing. This will be managed by UC Capital, a Euro-Indian partnership that invests in European small and medium enterprises in need of growth capital.

Capvent has over $2 billion in assets under management with offices in Zurich, Barcelona and Bangalore.

China’s private education sector has seen strong growth in the past years, fuelled by a rising middle class and favourable policies towards industry, according to Deloitte’s Development of Private Education Industry in China 2015. The government is likewise beefing up investments in education as it supports innovation-driven businesses and creates tax preferential programmes for research and development.