CIBT Education Group readies for ESL-student surge

Sprott Shaw College owner buys back language school KGIC

CIBT Education Group CEO Toby Chu sees rapid expansion in part because of Donald Trump’s election as U.S. president | Rob Kruyt

This story is part of a larger feature on international-student recruitment in the era of U.S. President Donald Trump. For the next part in this series, on post-secondary institutions locating regional offices abroad, click here

Vancouver’s CIBT Education Group (TSX:MBA) expects significant expansion on the horizon because of renewed international-student interest in studying in Canada, thanks to Donald Trump’s election as U.S. president, as well as from a new acquisition.

The company last month repurchased assets from the bankrupt KGIC Inc. (TSX-V:LRN) for $3.1 million. CEO Toby Chu told Business in Vancouver that the acquisition puts CIBT on track for an annual revenue run rate of between $50 million and $55 million.

About half of that revenue will come from international students, he estimated.

The transaction was also a boon to KGIC’s approximately 2,000 students, who would have been abandoned had no buyer been interested in obtaining assets that were largely English-as-a-second-language (ESL) schools.

CIBT in 2010 bought KGIC, which then had six campuses, for $4.3 million. CIBT then expanded KGIC’s annual revenue to $25 million in 2013 from $16.4 million three years earlier and sold the venture to Loyalist Group Inc. for $13.5 million in 2013.

Loyalist renamed itself KGIC Inc. and rapidly expanded to 18 campuses and $64.9 million in annual revenue.

“They actually got up to 25 campuses before going into consolidation mode to be 18 campuses,” Chu said. “Then they blew up. They were just overgrown. They borrowed and raised money and there were some accounting issues.”

CIBT wound up paying KGIC creditor Bank of Montreal the $3.1 million because KGIC was in receivership, Chu said.

Aside from new revenue from students attending KGIC, Chu said the company has been buoyed by rising interest in its 114-year-old Sprott Shaw College in the wake of Trump’s election.

“Sprott Shaw College International for our first and second quarters – between September 1 last year through February 28 this year – has gone up 54% in enrolment and 115% in revenue compared with the same six months in the previous year,” he said. “A large part of that increase is from Mexico, and obviously, with Trump, we know why that would be. We also got quite a bit of growth from the Middle East, and obviously, with Trump, we know why that would be, too.”

Overall growth at CIBT has also come from buying Vancouver International College for $1.5 million last July. That institution, which specializes in English-language training, enrols about 1,300 students per year.

CIBT now operates:

•16 business college campuses (domestic students) under the brand Sprott Shaw College;

•three business college campuses (international students) under the brand Sprott Shaw College International;

•six language-school campuses under the brand Sprott Shaw Language College;

•one Ontario high school under the brand Urban International School;

•six overseas campuses under the brands CIBT School of Business and Beihai International College;

•five overseas recruitment offices under the brand Global Education Alliance;

•seven student-housing apartments and hotels in Metro Vancouver; and

•one corporate head office in Vancouver.

“Our projected annual student enrolment will grow from 8,000 to 20,000 students in the next 24 months,” Chu said.

CIBT’s share price closed at $0.72 on April 21. A year ago, it was trading at around $0.30. •

gkorstrom@biv.com 

@GlenKorstrom