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Grand Group Investment to Buy 15% Stake in Chinese Online Education Firm.


22 April 2015 - Cayman Islands-based small business investor Grand Group Investment Plc (AIM: GIPO) has entered into an agreement to make a cash investment of RMB 20m (USD 3.25m) by acquiring a 15% shareholding in Chinese online learning solutions firm WuXi Jin Xun Tong Technology Ltd., the company said on Wednesday.

Grand Group said that the deal would be made through its newly incorporated wholly-owned subsidiary Gao Rui De Cultural Development Ltd.

The percentage investment is subject to upwards only adjustment depending on the profitability of JXT for the financial year 2015. No such adjustment is currently contemplated.

JinXunTong is an online learning solutions provider to China's urban and rural vocational education industry that was incorporated in 2010 in WuXi City, China.

It operates an integrated online training website Gong Yuan Wang, which provides online training video courses for industrial workers.

Gong Yuan Wang has developed an advanced data centre that is supported by one of China Telecom's three five-star internet data centres. This advanced dedicated line for connectivity ensures the stability of the system, speed of the website and security of the data, Grand Group said.

The website currently has approximately 4m registered members, of which approximately 2m are paying members who have already paid total membership fees of approximately RMB 200m.

JXT's unaudited results for its year ended 31 December 2014 showed profits after tax of RMB 22.6m (approximately GBP 2.45m) (2013: net loss of RMB 0.30m) on total revenue of RMB 40.9m (approximately GBP 4.43m) (2013 Nil). Unaudited net assets at 31 December 2014 were RMB 23.0m (approximately GBP 2.49m).

Trading in the first quarter of 2015, based on unaudited management accounts, showed profit after tax of RMB 25.5m (approximately GBP 2.76m) on total revenues of RMB 40.7m (approximately GBP 4.4m). Unaudited net assets at 31march 2015 were RMB 88. 6m (approximately GBP 9.57m).

Along with Grand's cash investment, Grand's 33% initial investee company Wuxi Victory Media and Culture Co., Ltd. has vended certain assets, licenses and expertise related to courseware development into JXT in return for an 18% shareholding of JXT.

Victory specialises in the development of traditional, "offline" courseware for the training of industrial workers. Assets sold into JXT include vocational training and the recruiting information website "Kaigongla." JXT and Victory will work closely together to develop vocational educational technology.

JXT is Grand's second investment in education technology related businesses in China, which is an area where the directors continue to see significant potential for growth and the enhancement of shareholder value.

Country: China

Sector: IT/Online Services

Target: WuXi Jin Xun Tong Technology Ltd

Buyer: Grand Group Investment Plc


Deal size in USD: 3.25m

Type: Stakebuilding

Financing: Cash

Status: Agreed

Buyer advisor: , ,

Comment: 15% stake

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Publication:M & A Navigator
Date:Apr 22, 2015
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