New Delhi/Mumbai: Private equity (PE) investor KKR and Co. Lp is in the final stages of discussions to invest around Rs700 crore in coaching firm Resonance Eduventures Ltd, at least three people aware of the development said. The structured finance deal will provide an exit to existing investors in the Kota, Rajasthan-based firm that prepares students for admission to engineering and medical colleges.
This money will be used to buy back shares from existing investors CLSA Capital Partners and India Build-Out Fund Investment Management Pvt. Ltd which hold a combined 27% stake in Resonance.
“Out of the Rs700 crore investment, about Rs350-400 crore will be used to buy back shares from existing investors and the rest will be used to expand presence to more geographies,” said the first of the three persons cited above.
CLSA Capital Partners invested Rs140 crore in the coaching firm in 2011, while India Build-Out Fund (IBOF) invested Rs60 crore in 2010.
In October 2015, CNBC-TV18 reported the firm was planning to raise Rs700 crore through an initial public offering. Mint reported in February that the company has dropped the IPO plan and its existing investors were looking to exit in a secondary transaction for around Rs500 crore.
“We don’t have any comments on speculations. As an investor in the company, we constantly evaluate various exit options available for us..,” said Rajesh Singhal, managing partner at India Build-Out Fund.
Asheesh Sharma, chief executive of Resonance Eduventures, declined to comment. Emails sent to KKR and CLSA went unanswered. In a similar deal, KKR had funded the promoters’ (Shah family—chairman Sushil Shah and his daughter Ameera Shah) buyback of 27% stake held by private equity firm Warburg Pincus Llc in Metropolis Healthcare Ltd in April last year.
PE firm TA Associates Management Lp is in talks to buy a minority stake in Kota-based Resonance Eduventures, Mint reported in July. US-based TA Associates plans to buy about 27% in Resonance for Rs400 crore, the Mint report said.
Resonance is the second education firm in recent times to defer an IPO. Last year, CL Educate Ltd (formerly Career Launcher) said it was deferring its IPO plan, citing an acquisition opportunity. The firm, which had filed its draft IPO papers, was looking to raise Rs180-240 crore.
This could be KKR’s second structured investment in Indian firms in a month. KKR deployed about Rs500 crore in Radiant Life Care Pvt. Ltd, which operates two hospitals—BLK Hospital in New Delhi and Balabhai Nanavati Hospital in Mumbai—last month. KKR is in advanced discussions to extend Rs500 crore in funding to Radiant Life Care, The Times of India reported in August.
Globally, KKR has made investments in the education sector such as UK-based Cognita Schools, an international schools group offering K-12 education across the globe, and US-based Laureate International Universities, a network of universities and colleges owned and operated by Laureate Education of Baltimore.
Through debt/structured financing, KKR so far has disbursed more than $3.3 billion to about 62 companies in India, including GMR Holdings Pvt. Ltd, Avantha Group and Apollo Hospitals Enterprise Ltd.
The buyout firm is in the process of raising its second credit fund worth Rs1,500 crore. The alternative investment fund will raise money from wealthy individuals and family offices in India, Mint reported in September.
In August last year, KKR India invested $150 million in JBF Industries Ltd, a manufacturer of polyester value-chain products.