Mumbai: In one of the biggest deals in the education sector, venture capital firm Matrix Partners India will invest Rs100 crore in FIITJEE Ltd, a training institute for students appearing in entrance exams to the Indian Institutes of Technology and engineering colleges.
The investment, announced on Monday, marks the second such backing by Matrix to an education business. It had earlier invested Rs30 crore in Treehouse, a preschool chain.
FIITJEE, set up in 1992 by Dinesh Kumar Goel, an IIT Delhi alumnus, offers a combination of training courses stretching up to four years and also offers correspondence courses for aspirants seeking engineering admissions.
“The company has moved beyond a one man show and is now corporatized and is geographically distributed across major cities,” Rishi Navani, Matrix co-founder and managing director told Mint in a phone interview. FIITJEE has 20 training centres.
Navani declined to give deal terms such as the stake Matrix was buying or the profit and revenue details of FIITJEE. The funds infused will be utilized to expand and open multiple centres in cities and towns where the education firm currently operates with just one centre. Expanding into other areas of education besides training for competitive examinations will also be considered later.
Goel could not be reached for comment.
Monday’s deal is part of a recent trend of venture capital and private equity (PE) firms picking up equity stakes in private education institutes in India. A recent report by Chennai-based deal tracker Venture Intelligence recorded 30 such investments worth at least $300 million (around Rs1,482 crore) in education-related companies from early 2005.
“Private equity players are relying on a combination of two things: greater government impetus (in education) and increasing privatization of the education sector,” said Vikram Utamsingh, executive director of audit and consulting firm KPMG and head of the Private Equity Group, an advisory firm for PE investment in India.
Sandeep Aneja, co-founder of Kaizen Management Advisors Pvt. Ltd, a PE firm that focuses on education, said the Matrix investment shows “the increase in appetite among traditional PE/VC players for growth stage deals in ancillary or parallel segments of the education sector”. The business, he added, is “the least regulated and (provides) opportunity for growth stage investments in profitable companies”.
Examples of other such deals include Helix Investments’ backing of Mahesh Tutorials Educare Pvt. Ltd and Intel Capital that funded Career Launcher India Ltd. On 25 June, Penguin, Pearson Plc said it had invested $30 million (around Rs145 crore) in two Indian education companies, Tutor Vista Global Pvt. Ltd and Educomp Solutions Ltd.
The Matrix-FIITJEE deal took about three months to close but talks had begun as early as 18 months ago, said Navani. Matrix, with a corpus of about Rs1,500 crore, has disbursed some Rs400 crore so far and expects to disburse the remaining amount in about two years.
Kotak Investment Banking was an adviser to FIITJEE, a company statement said.