This article first appeared in The Edge Financial Daily, on January 26, 2016.

KUALA LUMPUR: Businessman Tan Sri Halim Saad, the owner of private education group KYS Education Group, is seeking a valuation of as much as RM500 million in its initial public offering (IPO), said sources familiar with Halim's plans.

They said the offering is expected to take place in the second half of this year.

The proceeds will be used mainly for KYS Education Group's expansion plans to provide a full-fledged one-stop centre for education — from preschool to primary, secondary and tertiary foundation, and to double its intake of students to 2,000 a year.

However, details of the IPO remain sketchy as KYS Education Group has yet to determine whether it will list its operating business or park its assets under a real estate investment trust, one source told The Edge Financial Daily.

“KYS Education Group and the lead arranger [for its IPO] are still working out pertinent details like the amount of shares to be issued, and how much of them make up the enlarged share base's percentage. The amount to be raised is also yet to be confirmed,” the source added.

It is understood that given the soft market conditions, KYS Education Group might need to wait a few more months to obtain the RM500 million market capitalisation in its IPO.

The source estimates that KYS Education Group's draft prospectus could be issued after July, at the earliest.

Apart from seeking the desired valuation, KYS Education Group is waiting for its latest batch of students to come in in July.

“The group is expecting the number to be more than the usual 1,000 students this year,” said the source.

After more than 20 years of specialising in secondary education, KYS Education Group recently extended its offerings to include tertiary education, and soon preschool and primary levels as well.

Currently, all of KYS Education Group's educational institutions are parked under different companies, according to their education offerings. Upon listing, KYS Education Group will assume the role of the listed holding company for all the schools, said the source.

In October last year, The Edge Financial Daily reported that the group was in negotiations with a major property developer to set up a new school in Kuala Lumpur with a capacity of 900 students.

According to sources, KYS Education Group is due to sign an agreement with a listed property developer to build a primary and secondary school in the Melawati area, nearby the Kuala Lumpur city centre, at the end of February, with a 2018 opening targeted.

They added that KYS Education Group had total debts of around RM70 million, which it plans to repay some or all of them with the listing proceeds. The debts make up around 30% of the group's net assets.

A back-of-the-envelope calculation showed that using the debts' percentage to net assets, KYS Education Group would have a net asset value of around RM233 million. If the group gets the RM500 million valuation that it sought for, it would be valued at around two times its book value.

A source also said KYS Education Group currently generates an annual revenue of about RM40 million. “With the expansion plan, the group aims to double its revenue to RM80 million.”

KYS Education Group's crown jewel is its land in Ayer Keroh, Melaka — the site of its flagship private secondary boarding school Kolej Yayasan Saad. The school also recently acquired nearby Ayer Keroh Country Resort, where most of the chalets have been converted into students' accommodation.

“But there are some [chalets] that are retained for guests, and the facilities, such as function halls and swimming pools remain open for guests, thereby allowing the assets to be utilised year-round,” said the source.

Meanwhile, the source said Halim is already looking at listing another of its new venture into cloud-based accounting applications. Last month, Halim signed a memorandum of understanding (MoU) with Xero Ltd, a cloud-based accounting software provider listed on New Zealand's NZX stock exchange.

“The MoU was signed in December last year, and the [definitive] agreement is expected to be signed in March. The deal is more or less already firmed up because Xero will be coming for a roadshow here at the end of February,” said the source.

For now, Halim will register this business under a special-purpose vehicle. The plan is to get the accounting software business listed on the ACE Market of Bursa Malaysia upon reaching 30,000 customers or so, added the source.