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Aditya Birla PE, Omidyar Network to invest $7.6M in Tree House

BY  Madhav A Chanchani
Aditya Birla Capital is leading the round by investing Rs 31.16 crore for 3.71% stake in the pre-school management company.

Pre-school management company Tree House Education & Accessories Ltd is raising a little over Rs 41 crore ($7.6 million) from Aditya Birla Capital Advisors, the private equity arm of the Aditya Birla Financial Services Group, and existing investor Omidyar Network. Aditya Birla Capital is leading the round by investing Rs 31.16 crore for 3.71 per cent stake post-dilution through its Sunrise Fund. Omidyar will invest another Rs 10 crore in the firm, raising its stake to 3.55 per cent from 2.61 per cent.

Promoters of Tree House will also invest another Rs 40 crore through warrants as a part of this transaction. The company will organize an extra-ordinary general meeting (EGM) on December 27, 2012 to seek shareholders nod for the same.

Antique Capital Markets acted as an advisor to the company for this transaction.

The investment comes weeks after Unilazer Ventures, the family office set up by Walt Disney India chief Ronnie Screwvala, acquired 2.34 per cent stake in Tree House for Rs 17.2 crore ($3.2 million). Tree House counts Matrix Partners and Silicon Valley-based venture capital firm Foundation Capital as its early investors.

In 2012, there have been 33 deals worth $130 million in education services space till date, compared to 27 deals worth $172 million in 2011, according to VCCEdge, the data research platform of VCCircle.

Shares of Tree House closed at Rs 236.05 a unit, up 1.14 per cent on Monday, giving it a market capitalisation of Rs 805 crore. The shares will be allotted to new investors at Rs 222.6 per unit.

For H1 FY13, the company reported 65 per cent increase in income to Rs 55.8 crore with net profit up 71 per cent to Rs 17.95 crore, compared to the same period last year. As of September 2012, Tree House had a network of 309 pre-schools across 37 cities while its self-operated schools stand at 243 or 79 per cent of the total number of facilities. In addition, the company also operates 21 K-12 schools across three states.

Tree House, which raised around Rs 112 crore in its public issue last year, is a six-year-old firm founded by the Bhatia couple – Rajesh and Geeta. It started operations in 2007 and raised the first round of funding from Matrix Partners, which holds 26.41 per cent stake in the company and is sitting on over 3x unrealised gains on the investment.

Tree House has recently acquired the pre-school business of MT Educare, a Mumbai-based K-12 tutoring and test preparation firm, for an undisclosed amount. The deal gave it six company-operated centres located in Mumbai and Pune.

Aditya Birla Capital, which manages over Rs 1,100 crore, has approximately Rs 300 crore for its Sunrise Fund which targets emerging sectors in the Indian economy. The fund made its debut by investing Rs 40 crore in SMS Paryavaran, a water and wastewater treatment company, and recently backed fine dining restaurant operator Olive Bar and Kitchen.

Related

Ronnie Screwvala’s Unilazer picks up stake in Matrix-backed Tree House
PE-backed Tree House Tweaks Expansion Plan, To Open More Pre-schools

(Edited by Sanghamitra Mandal)

(Treehouse Play Group)

Tree House Education and Accessories Ltd. is engaged in providing education services. It operates pre-school and nursery facilities, vacation camps, hobby classes, day care facilities and teacher training courses. The firm also provides educational services to K-12 schools which include, designing curriculum and providing teaching aids, supplying methods for imparting education, organizing extra-curricular activities for students and teacher training. The company was founded in 2006 and is based in Mumbai, Maharashtra.

Omidyar Network India Advisors Pvt. Ltd. is a venture capital firm with $737 million assets under management. It provides early stage and debt capital to companies operating in Asia, Africa, United States, Latin America and Europe. The firm seeks to invest in microfinance, small and medium sized enterprises, emerging market ventures and property rights and also in profit and non-profit organizations. It typically invests more than $1 million in its portfolio companies as an initial investment. The company was founded in 2004 and is based in Mumbai, Maharashtra with additional offices at London, Washington, Johannesburg and Silicon Valley.

Aditya Birla Private Equity Sunrise Fund is a $65 million private equity fund managed by Aditya Birla Capital Advisors Pvt. Ltd. It provides early-stage capital to companies operating in India. The fund seeks to invest in education, food and beverages, healthcare and technology sectors. It typically makes investment between $5 million and $10 million in its portfolio companies. The Fund looks for substantial minority stakes while investing primarily in unlisted, exponential-growth, India-centric businesses in sunrise sectors with a potential to play the role of an active investor.

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