PE investors eye new approach to education

PE investors eye new approach to education

Mumbai: As private equity (PE) investors wait for the K-12 education space to become more deregulated, two firms that service the sector are looking to raise money from them.

Among the different models being considered as a means of skirting around the restrictions are school content providers, school management contracts and international baccalaureate (IB) schools.

iDiscoveri, which partners schools to improve learning methods and trains teachers, has appointed BMR Advisors Pvt. Ltd as an investment adviser, two persons familiar with the development said on condition of anonymity.

IDFC Private Equity Co. Ltd could put in money in the firm, they said, without specifying the quantum of investment. IDFC declined to comment on the matter.

Indian laws do not allow distribution of dividends or reinvestment of profits in entities running schools. Though some states such as Haryana and Maharashtra permit for-profit schools, national and state examination boards only allow affiliation to schools that are owned by non-profit organizations or trusts.

Private investors, therefore, are looking at different models to enter this space, particularly at those firms that provide content, according to Rajesh Singhal, managing partner, Milestone Religare Investment Advisors Pvt. Ltd. Companies that design courses have a lot of value proposition, he pointed out.

PE firms are also considering investing in school management, in which firms undertake management contracts to run and operate schools without owning land or infrastructure.

Manipal K-12 Education India Pvt. Ltd, a venture of and Manipal Education and Medical Group that operates 12 schools in India and Nepal through management contracts, is looking to raise Rs100 crore to expand operations.

“We want to roll up 100 more schools. We expect the deal to be closed in four-six weeks and currently are in talks with three players," said Krishnan Ganesh, founder and chairman, TutorVista.

Another area that could attract private funding is schools that follow the IB curriculum because such institutions are outside the purview of government regulations.

In April, for example, Pathways World School received Rs100 crore in PE funding from Reliance Capital Ltd, a Reliance Anil Dhirubhai Ambani Group firm.

“There are more than 60 IB schools in the market and about five-10 such schools right now are looking for PE funding," said Sandeep Aneja, managing director, Kaizen Management Advisors Pvt. Ltd.

Earlier this month,, a website that tracks the PE sector, reported that DY Patel International School, which has schools in Mumbai, Nerul, Navi Mumbai, Pune and Nagpur, all in Maharashtra, is looking to raise up to $100 million in PE funding to expand its network of international schools.

“Initially, it was hard to raise money, but in the past four-five years with the growth of IB curriculum and new concepts of teaching, the space has become attractive for investment," said Ashish Rajpal, chief executive of iDiscoveri.