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CFCG injects capital into Kunming Professional College of Arts, showing its diversified investment strength in education

2016.08.25

China First Capital Group Limited ("CFCG"; stock code: 1269) has announced that its wholly-owned subsidiary Yunnan First Capital Education Management Co., Ltd. has entered into an agreement with Yunnan Shuipai Jinsha Culture & Media Co., Ltd. and an independent third party to acquire a 70% stake in Yunnan Aisitong Education Management Limited ("Aisitong Education"), while Aisitong Education will exercise control over Yunnan Hope Education Management Co., Ltd. ("Hope Education"), a sponsor of Kunming Professional College of Arts ("KPCA"), and KPCA, through structured contracts. Accordingly, the financial performances and overall financial interests of both Hope Education and KPCA will be integrated into those of Aisitong Education. The Group hopes to improve its profitability and generate a long-lasting and stable cash flow by optimizing its business portfolio, with investment in education projects as its core business, through cooperation among its own sound and diversified financial services units.

According to the transaction agreement, the total consideration payable and funding come to RMB210 million, which is expected to be paid by the Group using a combination of its internal resources, debt instruments, and equity financing. Upon completion of the transaction, Aisitong Education will become an indirect, non-wholly owned subsidiary of the Group.

KPCA is a well-known college within the art education industry in China, whose predecessor Nie Er Music School was founded in 1986. In 2001, the School was upgraded to an art college that comprises Nie Er Conservatory of Music, performing arts, media, and design departments, covering a wide range of art and professions fields. It currently has about 5,000 students.

KPCA's has notched a number of achievements of excellence in education in recent years. Its faculty and students have won 94 national awards and more than 230 provincial awards, and the College has been identified by the Ministry of Finance and the Ministry of Education as a "National Vocational Education Experimental and Training Demonstration Base," and a "Comprehensive Media Training and Teaching Center." Its "Art and Design" and "Media" programs serve as national teaching experimental bases supported by China's national budget. In addition, the College was approved by the Provincial Department of Education of Yunnan as an "Innovative Pilot School for Comprehensive Talents," and a "Provincial Demonstration Vocational Training and Teaching Base for Yunnan's Institutions of Higher Learning." The CPC Yunnan Provincial Party Committee Propaganda Department honored KPCA as a "CCTV Young Singers' TV Competition Training Base," and famous dance artist Liping Yang listed it as a talent training base for the "Dynamic Yunnan" Series of Song and Dance Shows of the National Fine Performing Arts Projects.

Vast opportunities exist in private education as the market demand for education is on the rise, resulting from the fact that the strategic position of China's education has becomes increasingly important, development has been prioritised. Thus policies favorable to the industry have been introduced, reinforced by the implementation of the two-child policy and the increase of Chinese residents' disposable incomes. As a pioneer in the industry, CFCG continues to explore and invest in more quality education programs in the future, focusing on investment in K12 education, higher education, vocational education, overseas education and pre-school education, in order to position itself strongly throughout the education industry chain.

Dr. Wilson Sea, CFCG's Chairman of the Board and Executive Director, says “KPCA enjoys a great reputation in China and continues its active involvement in cultural and art exchange programs at home and abroad in recent years. It is gradually increasing its brand awareness in the domestic and international markets. Through the integration of its domestic and international education resources, the Group works in cooperation and aims to build itself into an international brand. Dr. Sea believes that the completion of the acquisition will result in the expansion of the Group's sources of revenues and bring a long-term and stable cash flow, which is in line with its own overall interests as well as those of its shareholders.”