Target Information

The Rise Fund, which is TPG’s global impact investment platform, has reached an agreement to acquire a controlling interest in Asia Pacific University of Technology and Innovation (APU) based in Malaysia. The transaction size has not been disclosed; however, reports suggest that the entire portfolio of tertiary education assets owned by KV Asia, including APU, was estimated to have an enterprise value between USD 300 million and USD 400 million. Rothschild was appointed to oversee this sale process starting in January 2022, although the timeline was impacted by delays related to the COVID-19 pandemic.

Founded in 1993, APU is a private university dedicated to providing high-quality, affordable education recognized internationally, serving approximately 13,000 students from over 130 countries. It boasts a remarkable 100% employability rate among its graduates, highlighting its commitment to the academic and professional success of its students. The university aims to blend theoretical knowledge with practical skills to prepare students for the global workforce.

Industry Overview in Malaysia

The higher education sector in Malaysia has seen significant growth over the past decade, driven by increasing demand for tertiary education among local and international students. As a result, various private institutions have emerged, providing a wide range of academic programs tailored to meet diverse educational needs. The Malaysian government has also actively promoted the country as a regional education hub, attracting foreign students through its policies and investment incentives.

Despite the challenges posed by the COVID-19 pandemic, the sector has demonstrated resilience. Institutions have adopted online learning and hybrid models, enabling continued education delivery and the expansion of their reach. The shift towards digital platforms has encouraged collaboration between institutions and tech companies, fostering innovation in educational methodologies.

Competition among private universities in Malaysia has intensified, compelling institutions to differentiate themselves through specialized programs, partnerships with international universities, and initiatives aimed at enhancing student experience. As universities increasingly focus on employability and industry partnerships, the quality of education is expected to improve further.

Moreover, the involvement of institutional investors in the education sector, such as the co-investments from Malaysian pension funds KWAP and Employees’ Provident Fund in the APU transaction, indicates a growing recognition of the value of educational assets. Such investments can provide stable returns while contributing to the social good, aligned with the emerging trend of impact investing.

Rationale Behind the Deal

The acquisition of APU by The Rise Fund aligns with its mission to invest in organizations that create positive social and environmental impacts. Investing in education directly contributes to human capital development, which is crucial for economic growth, particularly in emerging markets like Malaysia. APU's strong employability track record makes it a strategic addition to The Rise Fund's portfolio, complementing its existing investments in the education sector.

The deal is also positioned to leverage the growing demand for quality education in Malaysia, which is supported by both government initiatives and increasing numbers of international students. By enhancing APU's capabilities and extending its reach, The Rise Fund aims to bolster the university’s market position and drive further growth.

Investor Information

The Rise Fund is a prominent global impact investing platform managed by TPG, one of the largest private equity firms in the world. Established with the aim of generating both financial returns and positive social impact, The Rise Fund has attracted a wide range of investors seeking to contribute to sustainable development through their capital allocation.

With a notable portfolio that includes various sectors such as education, healthcare, and climate change, The Rise Fund has successfully raised significant capital, including a first close of USD 2 billion for its initial fund in 2017. The fund launched its second vehicle with a target of USD 2.5 billion, aiming to further its impact and investment reach. The total assets under TPG's Rise platform currently amount to USD 16 billion, illustrating robust growth and investor confidence in its strategy.

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From an expert perspective, the acquisition of APU by The Rise Fund appears to be a sound investment decision. The educational landscape in Malaysia is promising, with favorable demographics and government support driving growth in this sector. By securing a controlling stake in one of the top private universities, The Rise Fund positions itself well to capitalize on these trends.

Furthermore, APU's proven employability rate enhances its attractiveness as an investment. This metric can serve as a benchmark for measuring the effectiveness of the university's programs and its ability to attract new students, both locally and internationally. The co-investment from reputable Malaysian pension funds also signifies confidence in APU's potential and strategy.

Moreover, the global trend towards responsible and impact investing strengthens the rationale behind this deal. Investors are increasingly looking at how their financial commitments can foster social betterment, and education remains a pivotal area in this regard. By expanding its footprint in the education space, The Rise Fund can not only generate financial returns but also contribute positively to the Malaysian economy.

Overall, the acquisition can be viewed as a strategic move that taps into the lucrative education market, while also embodying the ethos of impact investing. As educational demands continue to evolve, The Rise Fund has the opportunity to enhance APU's offerings and solidify its market presence, leading to substantial long-term value creation.

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