Private equity firm Everstone Capital is picking up a 35 per cent stake in publishing house S. Chand & Company Private Ltd for Rs 200 crore or $38 million. The deal would value the New Delhi-based firm, founded in 1939, at over Rs 570 crore or $109 million. The investment is being made through Everstone Capital Partners II LLC, which raised $580 million last year.

In the past, the publishing sector hasn't seen much private equity action except Elephant Capital and Future Ventures investing in Amar Chitra Katha. This will be Everstone Capital's first play in the education sector.

Education publishing is an attractive play on the large and growing Indian education sector, according to Everstone. In terms of education spend the Indian education market is among the top 10 markets globally. The education publishing market is pegged at $1.8 billion and is estimated to be growing at 15-20 per cent per annum.

The company plans to chart an inorganic growth strategy with this round of funding. S Chand will also use the funding to move to digitization of the print medium to target the online market.

Coralbay Advisors Private Limited and Ambit Corporate Finance Private Limited were the financial advisors to the transaction. Trilegal was the legal advisor to Everstone, while DSK Legal advised S Chand & Co.

S Chand is in the business of educational and children’s books publishing, textbooks for schools, colleges and competitive exams, digital learning solutions, pre-schools and learning centres for children, and vocational/corporate training. Its content library includes more than 7,000 titles across these categories and association with 1,200 marquee authors.

S Chand's nationwide distribution network has 18 branches and six marketing offices across India, reaching out to over 4,000 active dealers and over 15,000 educational institutions. It has printing facilities in New Delhi and Rudrapur (Uttarakhand). S Chand's books are also sold overseas in South Asia, South-East Asia, Middle East and Africa across 21 countries.

S Chand & Co had profit after tax (PAT) of Rs 7.75 crore on the total income of Rs 144.64 crore in FY11. According to Care Rating, S Chand reported PAT of Rs 4.81 crore on total sales of Rs 90.93 crore for first nine months in FY12.

“There is a huge demand for K-12, competition, and technical books, and increasing number of schools are moving towards private publishers. Also, the job market in independent professional sectors such as engineering, banking, etc. is growing steadily. We want to continue to focus on our strengths in analytical, quantitative and, verbal reasoning,” said Dinesh Jhunjhnuwala, Vice Chairman of S. Chand Group.

The deal comes as Everstone, which has assets under management of over $1.5 billion, is betting aggressively on the domestic consumption story. Some of its recent investments include beauty and spa salon chain You Look Great (YLG) and Cuisine Asia, a holding company for restaurant business.

Everstone's other recent deals include architectural hardware products and solutions firm Ozone Overseas and agrochemical firm Crystal Crop Protection.

(Edited by Prem Udayabhanu)

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