Easier to buy than establish a university in Vietnam

By Hung Le   October 30, 2018 | 05:00 pm PT
Easier to buy than establish a university in Vietnam
Hoa Sen is one of many private universities seeing ownership transfer in Vietnam in recent years. Photo courtesy of Hoa Sen
As M&A activity heats up in the education sector, opinion is divided on whether it is a positive or negative development.

An extraordinary general body meeting of the Hoa Sen University was called last Tuesday to discuss the implications of Nguyen Hoang Corporation acquiring a large stake in it. Nguyen Hoang is a private education group of Vietnam.

Given the scale of the transaction and the fact that Hoa Sen has become a prestigious, well known university in the country, the acquisition has stirred much debate and dispute in the education sector.

Some are wary of education being treated as just another business, and worry about the impact it will have on the quality of education and the original orientations of the universities.

Others argue that this is not a bad thing, that it is normal commercial activity that can have beneficial impacts.

According to experts, Hoa Sen carries a value of around VND2 trillion ($85.6 million) with modern facilities, many students, good reputation and decent growth momentum.

Although it has experienced temporary internal disputes and devaluations, the university is still one of the educational institutions in Vietnam with high revenues from student fees.

Hoa Sen is one of several private universities in Vietnam that have experienced ownership transfers in recent years. Many corporations with strong financial reserves are investing millions to acquire universities and colleges in the country.

Easier path to ownership

Experts say that sale and acquisition of private university stocks have boomed in Vietnam over the past few years, because buying shares in an operating university is far easier than establishing a new one.

Economist Tran Vinh Du told the Thanh Nien newspaper that regulations setting a minimum capital requirement of VND 1 trillion ($42.8 million) to set up a university makes it extremely difficult for people to consider starting new institutions, as few have this kind of money to invest.

But for just tens or hundreds of billions of Vietnamese dong ($1=VND23,380), one can buy high stakes in a college or university. The legal processes required to buy a school is much less complex than to establish a new one, he noted.

The Hutech Education Development Joint Stock Company bought more than VND100 billion ($4.28 million) worth of shares in the HCMC University of Economics and Finance (UEF) in 2014.

The Hung Hau Joint Stock Company has purchased shares in Van Hien University worth VND60 billion ($2.58 million), apart from acquiring Van Xuan College and Van Tuong Secondary School in HCMC. The Thanh Tay University is now owned by the Vicostone Joint Stock Company (VCS).

Normal commerce

Economist Du said that trading in private university equity was completely normal and something that can be expected to continue for a while.

“Basically, the investment in, or generally speaking, the sale and acquisition of universities at the moment has more positives and negatives”, said Dam Quang Minh, Principal of the Phu Xuan University. 

“This is a chance for universities to develop and reform,” he said.

“Another issue we need to be aware of is that these acquisitions are usually transfers of ownership from individuals to institutional investors. This is therefore, better from a management perspective for the universities.”

In January 2018, at the “Finalizing policies and legislation on private universities" conference at the Committee on Culture, Youth, and Children organised by the National Assembly, education experts were still vehemently debating whether private universities should be regarded as businesses.

‘Regulated business’

Some experts found that the transfer of private universities in recent years no different than mergers and acquisitions of ordinary companies. Accordingly, they suggested that private universities be considered “a regulated business.”

Pham Phu, a former lecturer at the HCM City Polytechnic University, said many Asian countries see private universities as semi-for profit organisations. 

This means that while private universities are treated as for-profit organizations, they are subjected to management policies that prevent them from becoming fully profit-oritented companies.

Vietnam currently has 84 private schools, of which 60 are universities and 24 are colleges, with over 13,000 lecturers and 330,000 students. Their students account for 14 percent of all students in the country.

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