SINGAPORE - Mainboard-listed MindChamps Preschools has inked a deal with a unit of state investment firm Temasek Holdings to invest in setting up or buying pre-schools, the pre-school operator said on Monday (April 9).
The MindChamps PreSchool Global Fund will invest directly or indirectly in country pre-school fund products, with schools to be run under the "MindChamps" brand.
Palace Investments - an indirect wholly owned subsidiary of Temasek's Pavilion Capital Holdings - will commit an aggregate of US$50 million to the fund. And if the returns exceed an agreed threshold, MindChamps will be entitled to an agreed portion of the returns beyond that threshold.
The MindChamps PreSchool Global Fund will be set up as a limited partnership in either the Cayman Islands or Singapore, MindChamps said in its announcement on the Singapore Exchange website.
The pre-school operator will own 70 per cent of the issued share capital of the holding company, through ordinary shares, and Palace Investments - which is contributing US$1.7 million in capital to the holding company - will own 30 per cent, through convertible preference shares.
The fund will raise capital from the offering and sale of limited partnership interests to limited partners, which will also comprise third-party investors.
MindChamps will also incorporate an investment manager with an initial share capital of US$300,000, with the holding company to then move in another US$1.7 million in consideration for the issuance of a nominal number of shares in the manager.
MindChamps will have a call option to purchase the holding company's shares in the investment manager for a nominal amount, the company added.
It said that it expects to receive profits from the operations of the holding company, which will receive dividends from the general partners of the MindChamps PreSchool Global Fund and the MindChamps PreSchool China Fund, as well as any other funds or other similar arrangements that might be established subsequently.
Other income streams for MindChamps will be profits from the operations of the investment manager, and the share of profits on the returns beyond the agreed threshold.
The company has previously set up the MindChamps PreSchool China Fund, in a joint venture with China First Capital Group. That deal was inked in February 2018.
Pavilion Capital chief executive Tow Heng Tan said in a statement: "Pre-school education is a growing sector due to rising demand from the middle-class population globally. MindChamps is an established brand in Singapore. We are pleased with the opportunity to work closely with them to internationalise through expanding their network of overseas franchisees."
MindChamps was up by 3 cents, or 3.85 per cent, to 81 cents as at 2.35pm, after the announcement.