Educomp Solutions Ltd, India’s largest listed education company, has deferred its proposed plan to raise up to $250 million (Rs 1,150 crore) through sale of shares due to poor market conditions, according to a company disclosure to the Bombay Stock Exchange.
In June this year, Educomp got shareholders’ approval to restructure its outstanding foreign currency convertible bonds (FCCBs) worth $78.5 million and raise its authorised share capital.
“Management estimates that it will be comfortably able to meet future obligations falling due in July 2012 from a combination of internal accruals/external commercial borrowings (ECB)/debt-linked structures, subject to regulatory and shareholder approvals as applicable,” the company stated.
However, this did not stop investors from dumping the company’s shares after it deferred the proposed share sale. Educomp scrip crashed over 4 per cent and was trading at Rs 195 per unit during mid-day trading on Friday – falling to near a one-year low.
This came in spite of the fact that the education space in India has frequently attracted both financial and strategic investors. The annual government spend on education is approximately $30 billion while the annual private spend stands at $43 billion, according to a 2010 note from Kaizen Management Advisors – an education-focused private equity firm.
Founded in 1994, Educomp Solutions Ltd is a globally diversified education solutions provider, and serves more than 15 million learners and educators across the world. The company has an employee base of over 10,000 professionals (including contractual employees with various state governments).
The company operates through its various subsidiaries, such as AuthorGen, ThreeBrix E-Services, Learning.com (USA), AsknLearn Pte Ltd (Singapore), and also through its associates, such as Savvica Inc.
The education sector has seen an increasing interest from PE players, with investments of $190 million across 23 deals in 2010, as compared to 10 deals worth $128 million in 2009, according to VCCedge, the financial research platform of VCCircle.
There are several education-focused PE funds, as well as generic growth capital funds, who are eyeing this space. For instance, Kaizen Private Equity, which is raising a $100 million fund for the sector, has secured funding from HDFC, India’s largest mortgage lender, and World Bank body IFC (International Finance Corporation). Another player is Milestone Religare, with dual focus on education and healthcare.