September 23, 2014

Tuesday, September 23, 2014
By Yasmine Yahya

A PRIVATE equity fund linked to Temasek Holdings has injected $10 million into pre-school operator Nurture Education Group.

Nurture has been operating in Singapore for 15 years and has three chains of infant care, pre-school and student care centres – Little Footprints, Kiddiewinkie Schoolhouse and Pibo’s Group respectively.

“We are very impressed with the growth Nurture has delivered in the past one year since out first investment” said DAPE founding partner Keith Tan. “Our working relationship with the management team has been excellent and we look forward to our continued partnership. We are also very excited with the growth opportunities in the early childhood sector, both in Singapore and in the neighbouring countries.”

In the year since DAPE’s first investment, Nurture has increased the number of childcare centres it manages and operates from 11 to 18, expanding its capacity from 1,000 children to about 1,640. Children under its care range from two months to 12 years, though the bulk of the business is in childcare, for children aged 18 months to six years old.

Nurture co-chief executive Matthias Koh said yesterday that the firm used the first tranche of funds from DAPE to strengthen its back-end operations. “We invested in out headquarters functions, such as curriculum, IT, finance and human resources. We hired more staff and now have over 20 in the back end, from just seven or eight staff initially.”

Nurture plans to use the second DAPE investment to expand its presence here and eventually across the region, Mr Koh added. “We’re interested in taking on mergers and acquisitions so we can expand our reach and benefit from greater economies of scale. As we expand, we would also be able to provide more interesting career paths for our staff.”

Nurture employs more than 250 staff and plans to double the number of teachers over the next three to five years. It aims to have 20 owned and operated centres across Singapore by the end of next year and more than 40 by 2017, up from 18 today. The new funding will also be used to boost staff capability, strengthen its curriculum and lift standards.

Once it has a strong enough foothold in Singapore, it plans to explore expansion opportunities across South-east Asia, with particular focus on Malaysia, Indonesia, Vietnam and Myanmar, Mr Koh said. “I think Singapore has a strong reputation for education. When we are sufficiently strong, then we’ll take the brand regionally and we think we’ll be well received.”

DAPE is the private equity arm of Dymon Asia Capital, a Singapore-based investment management company which manages more than US$4billion (S$5 billion) in assets. DAPE invests in promising and leading SMEs in Singapore and South-east Asia.

It has a target fund size of $300 million, of which $100 million is contributed by Heliconia Capital Management, a wholly owned subsidiary of Temasek Holdings. Its other SME investments include furnishings firm Goodrich Global and HSL Constructor, a marine civil engineering and construction firm.

Mr Koh said Nurture was initially sceptical about taking funds from an external investor, as it was worried about having outsiders controlling its business decisions. “But they assured us that they were there to support and not to dictate to us and they have done so. As professional investors, they provide us with analysis of broader economic matters and help see if our business strategy is on the right track,” he said.

“We didn’t have that capability before so it definitely helps us, and we can focus on the micro things such as the quality of our teachers and school operations.”

TEMASEK-linked Dymon Asia Private Equity (DAPE) has made its second investment in a home grown firm, as it seeks to build a stable of leading small and medium-sized enterprises (SMEs) from various sectors.

DAPE has pumped $15 million into Singapore-based company HSL Constructor, a marine civil engineering and construction firm. DAPE is an arm of Dymon Asia Capital, a Singapore-based investment management company which manages about $4.2 billion in assets.

DAPE has a target fund size of $300 million and mandate to invest in promising SMEs in Singapore and South-east Asia – companies at the forefront of their respective sectors. In January, DAPE made its first investment, injecting $15 million into local interior furnishings company Goodrich Global.

Heliconia Capital Management, wholly owned by Temasek Holdings, provided $100 million in seed capital to the fund

Dymon Asia founding partner Keith Tan said he has known the managers of HSL since 2003, but it took the fund close to one year to court them. “We are attracted to HSL because it has a strong track record, vivid vision, plausible growth plans and staunch social strategy,” he said. “Not only is HSL’s financial status assuring, its growth plans are both promising and inspiring.”

HSL chief executive Charles Quek said the company was very keen from the start to tie up with Dymon and DAPE, but did not want to rush into it as he wanted to make sure the relationship could last a long time.

“We wanted Dymon to know exactly how we conduct out business, our culture and values,” he said. “So, over the one-year period, we brought them out projects here and in Jakarta, brought them to visit out partners in CHina, got them to meet out customers and management.

“We also got to know Dymon’s management team, shared out plans with them and they shared theirs with us, and after almost a year, we really felt compatible.”

The $15 million investment, which will buy DAPE a stake of about 20 per cent in HSL, will come in handy as the latter ramps up its overseas expansion, Mr Quek said. Part of the fund will go towards buying equipment that will allow the company to win bigger projects across the region.

HSL is also looking at acquiring companies in Asia to expand its footprint and capabilities, and DAPE’s investment will help to fund this, Mr Quek said. “I think their expertise in capital markets, their financial know-how, could be a strength that complements us very well,”

“We are after all, a construction company, we are all civil engineers. If we can marry out engineering capabilities with their financial skills, we can really create a lot of opportunities.”

Source: The Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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