Career Launcher parent CL Educate files for up to $40M IPO, Gaja Cap to part exit

Education services company CL Educate, best known for its erstwhile test prep brand Career Launcher, has filed its documents with market regulator SEBI for its initial public offering. The proposed issue comprises both fresh share issue and an offer for sale by its promoters as well as private equity investor Gaja Capital.

The firm is looking to raise up to $40 million, half of which will go to the selling shareholders.

CL Educate comes as yet another PE-backed firm filing for a public float. It follows PNC Infratech, Ortel, Monte Carlo and Adlabs Entertainment. Some like Snowman Logistics and Sharda CropChem have already completed their public issues.

Here's a snapshot of the IPO

- Issue size of up to 4,000,000 shares including fresh issue of 2,017,478 shares and offer for sale of 1,982,522 shares by promoters and PE investor.

- The firm is looking to raise Rs 90-120 crore through the fresh issue which could mean the overall issue could be worth Rs 180-240 crore.

- The IPO shall comprise 29.28 per cent of the post issue equity base.

- Kotak Mahindra Capital is managing the proposed issue.


- The firm is a provider of educational products, services, content and infrastructure in India. It started in 1996 as a provider of MBA test preparation courses and has diversified since then across four segments across the education value chain: test preparation and training, generally referred to as test prep, under Career Launcher brand; publishing & content under GK Publications; K12 schools under the brand Indus World Schools with 10 schools across India; and vocational training programs.

- Under the umbrella of Career Launcher test prep courses, it offers test prep courses for MBA, Civil Services and Law, as well as courses for, among others, Engineering, Bank entrances, GATE and Staff Selection Commission.

- For FY14, it had 67,549 enrolments in test prep segment across a network of 164 test prep centres in 73 cities throughout India, with 76 owned centres and 88 centres operated under a partnership model.

- Out of its total student enrolments, as on March 31, 2014, it had 32,286 enrolments in MBA courses, followed by 12,138 enrolments in Civil Services courses, and 9,220 enrolments in Law courses.

- Entered publishing with acquisition of the GK Publications business in November 2011 to add a brand publishing niche test prep books, guides, mock test papers and question banks for popular professional and entrance examinations in India, including titles for Engineering, GATE, Civil Services and Bank entrances.

- During the year ended March 31, 2014, it released 945 titles and had sold over 1.1 million copies under the brand GK Publications.

- It also provides infrastructure, educational services and licenses brand Indus World Schools to 10 K-12 schools across India. Out of these two are in owned-infrastructure model, six have infrastructure-partnership model and two have educational-partnership model.

- As of March 31, 2014, it had 2,612 students in owned infrastructure or infrastructure partnership model across the states of Punjab, Delhi NCR, Madhya Pradesh, Chhattisgarh, Maharashtra and Haryana.

- In the vocational training segment, it had an aggregate of 8,233 enrolments under project tenders issued by the central and various state Governments, during FY14, across the states of Gujarat, Rajasthan, Jharkhand, Chhattisgarh, Madhya Pradesh and Uttar Pradesh.

- The firm is also into certain recruitment, training and event management services for corporates through its subsidiary, Kestone.


Its revenue from operations rose from Rs 198.97 crore to RS 218.6 crore in FY14. Revenues from test prep business

aggregated to Rs 101.6 crore as against Rs 98.5 crore the previous year; publishing and content development rose to Rs 18 crore from Rs 14.9 crore; K-12 schools brought Rs 6 crore over Rs 5.2 crore; vocational training programs added Rs 16.2 crore compared to Rs 14.6 crore and revenues from recruitment, training & event management services for corporates aggregated to Rs 73.3 crore as compared to Rs 62.7 crore in FY13.

The company's net profit aggregated to Rs 16.3 crore last year as against Rs 14.7 crore in FY13.

Use of IPO proceeds

The firm intends to use Rs 30.8 crore to fund working capital requirements; Rs 21 crore for pre-payment of a debt facility availed by Career Launcher Infrastructure Pvt Ltd, which runs its K12 schools under owned-infrastructure model; Rs 20.9 crore to invest in Career Launcher Infrastructure for capacity expansion and infrastructure development at certain Indus World Schools and Rs 17.1 crore for investment in publishing unit to meet working capital requirements.


Over the years the firm has raised institutional capital from a string of investors. Intel Capital, one of the first investors in the company, exited the firm long time ago, but the firm later brought in Gaja Capital and has just raised Rs 35 crore from HDFC, which has investments in education sector.

Some other small investors in the firm include Granite Hill, Edelweiss Finance and India Infoline Venture Capital among others.

Gaja Capital along with GPE India has put in an estimated Rs 70-76 crore and holds 15.48 per cent stake. Based on the original investment it is sitting on 2x on its seven year old bet. However, the PE firm went on to invest more in tranches over the last two years which pushed up its cost of purchase and at the tentative issue price of around Rs 590-600 a share it would be part exiting with a modest 50 per cent upside (based on blended cost of acquisition of shares) on a fairly mature seven year old investment.

Among others, Granite Hill, which invested a small sum of Rs 2.5 crore in March 2012, is selling all its shares for around Rs 3.5 crore.

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