Mauritius firm puts $12 million into Mumbai’s Mahesh Tutorials

Mauritius firm puts $12 million into Mumbai’s Mahesh Tutorials

Soon, a student can be co-owner of the coaching class that tries to drill some maths into his head.

Mumbai’s well-known coaching schools are approaching foreign investors to fund their ambitious expansion plans. Foreign direct investment (FDI) is enticing because it is a sure-fire route to enlisting on the stock market, the managements of these institutions say.

On Wednesday, Mahesh Tutorials Educare Pvt. Ltd received FDI worth $12 million (about Rs49 crore) from Mauritius-based Helix Investments to expand its operations in India and abroad.

With current revenue of Rs35.5 crore, the tutorial, which has a strong presence in Mumbai, wants to have a turnover of Rs150 crore by 2010. Most importantly, a stock market listing—an initial public offering (IPO)—could be likely in the “near future," Mahesh Tutorials’ officials said.

With parents getting their children admitted into these tutorials in record numbers, coaching classes today are looking at themselves as a “powerful support system and not competitors to schools and colleges," officials at the coaching centre said.

According to current industry estimates, the market for coaching classes in India stands at between Rs3,000 crore and Rs5,000 crore—growing at 25% rate annually.

“Raising private equity is the first step before a company can be listed as an IPO in the stock market," said Nikhil Mahajan, managing director of New Delhi-based Career Launcher India Ltd, which coaches students for entrance examinations in management and law, and for the Indian Institutes of Technology.

“FDI basically arises out of the need to raise capital, but IPO is the final route."

Mahajan pointed out that Mahesh Tutorials’ FDI infusion is not the first instance of a coaching institute receiving foreign funding. In the next three-five years, Career Launcher would take the same IPO route, he added.

In 2000, Career Launcher received FDI of $1 million from Intel Corp.’s investment arm Intel Capital. “Foreign investment accelerates the pace of growth," Mahajan said.

“It gives you the flexibility for expansion, to get into a newer geography, introduce new products and also make acquisitions," he said, adding that the tutorial is exploring several opportunities to raise additional capital.

Other coaching institutes are not far behind. Mumbai-based IITian’s PACE, which comprises former IIT professors, coaches students for the IIT entrance examination. IITian’s PACE is currently in advanced stages of talks with three foreign venture capitalists to finance a one-stop solution for all the educational needs of a child coming from the wealthy class. “Things should get finalized in one month," said Praveen Tyagi, managing director of the institute.

Meanwhile, Mahesh Tutorials plans to expand its national footprint with centres in Gujarat, South India and North India. Mahesh Shetty, founder and chairperson, said Mahesh Tutorials eventually hopes to run 400 coaching centres across the globe that would include countries in the Middle East and math tutorials centres in the US and London.

Tyagi pointed out that when professionals enter the job market, it calls for corporatization of Indian education. “When talented people do not get into teaching because of government regulation, a parallel system is created by coaching classes," he said. “There is a need to privatize education so that there is an open market for people to invest." HINDUSTAN TIMES