SHAH ALAM: Property developer and education provider Paramount Corp Bhd is exploring the divestment of some of its education facilities, which will be in line with the group’s asset-light strategy for its education business.

At a media briefing yesterday, group chief executive officer Jeffrey Chew (pic) said he expects the value of the divestment to be worth RM300 million to RM500 million.

“We are looking at [divesting] some of the education facilities worth RM300 million to RM500 million. It has to be a good size, at least RM300 million, to make it meaningful,” said Chew.

When asked which specific facilities the group is looking at divesting, he said, “It could be the KDU [University College] campus in Glenmarie, or Sri KDU [International School] campus [in Kota Damansara]”.

He said Paramount is not looking at divesting the KDU College campus in Damansara Jaya as the group is considering redeveloping the site.

Paramount’s (fundamental: 3.0; valuation: 1.6) education portfolio includes Sri KDU, KDU College, KDU University College and KDU Management Development Centre.

“We are not divesting the education business as it is very profitable. We are looking at [divesting] one or two facilities so that we can focus on the business operation of the university,” he told the Edge Financial Daily.  

“There are a couple of parties that approached us. We are in discussions exploring [the opportunities],” he said when asked if Paramount is already in talks with any party.

Chew said Paramount would divest the said facilities and would then lease them back for the next 10 to 20 years.

He added that the group can reinvest the divestment proceeds into its property project in Batu Kawan and for its private school business.

The 30-acre (12ha) Batu Kawan development has a potential gross development value of RM1 billion. Earthworks have started and management expects to launch in 2016, with the completion of the university college in 2018 or 2019. To recap, in 2014, Paramount purchased the 30 acres of freehold land in Batu Kawan, Penang for RM67 million from Penang Development Corp (PDC) to build a university college and mixed development project.

Chew said the group has a sales target of RM400 million this year and is also looking at a new launch in the coming months. Currently, 30% of Paramount’s revenue comes from its education business, with the rest from property development. The group reported a net profit of RM52.38 million in the nine months ended Sept 30, 2014, on revenue of RM352.39 million.

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This article first appeared in The Edge Financial Daily, on February 11, 2015.