Tour operator Cox & Kings
is exploring an initial public offering for its education tour
business in Europe and Australia
as it believes it will generate better value for the company and its shareholders.
The education tour
business is part of Cox & Kings’ operations, after it acquired the UK-based Holidaybreak
for Rs 2,300 crore in 2011. Back then, it had acquired a hundred per cent stake in Holiday break with an equity investment of around $230 million and a debt of around $500 million. A year later, it sold 34.4 per cent of its stake in the firm, bringing down Cox & Kings’ ownership to 65.6 per cent.
The education segment now contributes 30 per cent to company’s revenue and 35 per cent of earnings before interest tax depreciation and amortization (Ebitda) on a consolidated basis. In second quarter FY18, the company reported a consolidated revenue of Rs 668 crore and an Ebidta of Rs 298 crore.
The tour operator offers residential outdoor learning programmes and study tours for schools and colleges and owns 29 campuses in Britain, France, Spain
and Australia. Cox & Kings
group CEO Peter Kerkar said that the company controls 30 per cent market share in education tours in UK
and has grown 8 per cent in the market.
"We would like to do an IPO
for the education business in next 18 months," said Kerkar on Thursday. A formal decision regarding the stake dilution and quantum is yet to taken. The share sale proceeds can also be used to pare down debts, standing at around Rs 4,150 crore.
Kerkar's optimism is fueled by a secondary share sale in the firm which resulted in a swap of ownership among its minority investors. He believes that the current market capitalisation of Cox & Kings
does not adequately reflect the potential of the education tour business.
On Thursday, SSG Capital Management, a Hong Kong-based investment fund manager acquired 34.4 per cent stake in Holidaybreak
from Rohatyn Group for around $200 million. Cox & Kings shareholding
is now valued at around $ 400 million.