New Silk Route Partners
New Silk Route Partners (NSR), an Asia-focused private equity (PE) fund has acquired a significant minority stake in Hyderabad-based educational support services provider Varsity Education Management for an undisclosed amount. But it is supposed to be in the range of $40-50 million. NSR founded in 2006, has $1.4 billion under its management.
Varsity Education provides operational and support services, such as curriculum development and teacher recruitment, to over 350 educational institute in Karnataka, Andhra Pradesh, Maharashtra and Tamil Nadu.
This is NSR ‘s second investment in the education sector. In 2008, it invested in Lahore-based Beaconhouse School System, a primary and secondary education chain. NSR said it is looking to invest as much as $300 million this year, primarily in medical devices firms and restaurant chains, Mint had reported on 17 January.
“Education is a great sector, if you are an investor and intending to capture India’s growing consumer story led by domestic consumption,” said Jacob Kurian, one of the partners of the fund.
“As the country’s regulatory restrictions prohibit investors from making a profit in education, it is difficult to invest in schools directly,” Kurian said. “Therefore, the other attractive opportunities in the sector are in relatively unregulated allied businesses like support services providers.”
While it is too early to think of an exit from Varsity Education, a public offering or a strategic acquisition could be the eventual options, Kurian said.
PE firms invested $10.6 billion (Rs. 54,166 crore today) in India across 501 deals in 2011, of which 17 deals worth $126 million were in the education sector, according to VCC Edge, which tracks investment activity. According to data from industry tracker VCCircle.com , the investment are up by more than a fifth compared to $8.47 billion across 416 deals in 2010, .
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