Monday, July 14, 2008

Dawn of PE in Indian education space

As fund managers and investors look for new ideas in the investment universe, Education is one sector that is gaining prominence for both PE and Venture capital. With only a handful of listed players and and a few other organized players operating in the non regulated segment of education, there is ample headroom for growth and possible entry of more players in the next few years.

Educomp, the country's leading education company on the basis of stock market performance (market cap had recently crossed $2b) has a revenue base of 280 crores implying huge growth expectations from the company. Gaja capital had invested in the company and made handsome returns on its exit last year.

Everonn, with revenues of ~95 crores in 2008, has touched valuations of 1700+ crores before correcting over 60 percent recently. Recent investors include New Veron, DB & The India Fund (Blackstone)

NIIT, on the other hand gives investors an exposure to education and to the vocational training space. Its revenues crossed 1000 crores in FY08 and is Asia's largest education & training company, is also down ~40% from its 52 week high. It is expanding its horizons beyond IT education into other employability segments and is a leading player in School education and in Corporate training . Its current market cap is ~$400Mn.

With a 100bn+ population and poor education infrastructure, Education offers a huge opportunity for value creation for private money. However the rule is "Caveat Emptor" as all is not lais·sez faire.

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