Carlyle backs schools in China

The Carlyle Group has invested $20 million in a Chinese language institute to help it expand across the country.

The Carlyle Group has committed $20 million from the Asian growth capital fund it is currently investing, a $680 million vehicle, to fund the expansion of NeWorld Education Group, a language institute that specialises in teaching Chinese people Japanese.

Founded in 1997 in Shanghai, NeWorld Education has developed a network of 65 schools that offer Japanese language training in 13 cities across China. NeWorld has also made its foray into Beijing with the launch of three schools: NeWorld Training Centre, Sakura Japanese School and New Baby Youth Education, according to a statement.

Wei Xu, founder and president of NeWorld, said Carlyle’s investment would “support our strong push in developing new business lines and geographical expansion to more than 120 schools across 18 to 20 cities by 2009”.

Success in Japanese language teaching has prompted NeWorld to expand into English for children and Mandarin for expatriates living in China. According to the National Bureau of Statistics of China, total education expenditure reached $95 billion in 2004, up 16.7 percent from $82 billion in 2003.

It’s the second growth capital deal for Carlyle in Asia’s education sector and follows a Korean investment in May.

Wayne Tsou, managing director and head of Carlyle’s growth capital business, said: “We like the resilient nature of the education market, which often grows regardless of economic cycles. The segments that NeWorld targets are estimated to be more than $1 billion in aggregation and are growing at 30 percent per annum.”

Since closing in June last year, Carlyle Asia Growth Partners III has committed nearly $300 million to support 13 businesses across seven sectors. Chinese companies account for more than half the committed capital and portfolio, according to Carlyle. The Washington-based group is expected to conduct an investor meeting in Asia this week and new fundraising is expected to be part of the agenda, sources tell PEO.