VietNamNet Bridge – More and more schools that have incurred losses are being sold by their owners this year.

Phan Chau Trinh University, the first school in Vietnam following a high-quality training model since 1996, for example, has been incurring losses since its opening.

In 2013, the school reported a total loss of VND12 billion, while it will have a loss of VND3.5 billion for 2014.

The school, which is facing danger of being forced to shut down, has unexpectedly announced a shift to a non-profit operation model after an individual committed to give non-refundable aid of VND1 billion and a guarantee for a bank loan worth $5 million.

Van Hien University is facing the same situation. In 2012, the investors intended to sell the school for VND75 billion, which was just equal to quarter of the real value.

However, some shareholders did not accept the transfer deal at such a low price, and tried to look for new investors.

Tran Van Hau, chair of Hung Hau Development JSC, has become the chair of Van Hien School Board of Management.

Following success with a franchise model, VATC, an English school running 28 English centers, in 2007, decided to enter the vocational training sector by setting up the Viet My Vocational School, attracting more than 2,000 learners just after two or three years.

At that time, Black Horse Asset Management, the US-based investment fund, acquired capital contribution from the founding shareholders and became the owner of IAE Group, which runs VATC and the vocational school.

However, after meeting many difficulties, Black Horse in 2013 decided to sell its capital contribution in IAE to an alliance of investors from TNK Capital, EQuest and Ismart Education.

Tran Vinh Du, general director of TNK Capital, noted that such merger and acquisition deals were a growing tendency in the education sector.

“M&A will help educators ease their financial burden,” he said. “Schools which have high prestige, and are located in advantageous positions, will be targets for investors.”

Also, according to Du, investors find it more difficult now to develop schools because of legal barriers.

Under current regulations, foreign-invested schools in Vietnam which provide international general education are required to have a maximum of 10 per cent of Vietnamese students of the total student enrollment.

The government of Vietnam has also set higher requirements in terms of facilities and teaching staff for junior colleges (3-year training) and universities (4-5 year training).

The schools must have a minimum land fund of 5 hectares and must be located far from the central area.

Dr. Nguyen Thi Quynh Lam, an educator, noted that it takes investors 10 years on average to make profits.

Analysts commented that the boom of investments in education has created a more competitive education market.

DNSG