Gaja Capital-backed CL Educate eyes $107 mn valuation in IPO
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New Delhi-headquartered education services company, CL Educate Ltd, is seeking a valuation of Rs 708.84 crore ($107.11 million) through an initial public offering that opens next week.

The IPO will begin on 20 March and close on 22 March. The anchor book will open one business day prior to the date of opening of the public issue.

The company has fixed the price band at Rs 500-502 per share for its public offering, which will see its private equity backer, Gaja Capital, making a part-exit. Besides, the promoter, promoter-group individuals and institutional shareholders are also expected dilute their stakes in the company.

CL Educate’s Rs 238.95 crore ($36.10 million) IPO will comprise a fresh issue of 2.18 million shares besides an offer for sale (OFS) of nearly 2.58 million shares. It will see a dilution of 33.61% stake on post-offer basis.

CL Educate, best known for its test prep brand Career Launcher, will be the first education services startup to float an IPO in the past five years. MT Educare Ltd with a Rs 35-crore public offering was the last company in the space to float an IPO in March 2012. 

The company has proposed to utilise a tad more than Rs 50 crore of the net proceeds from the IPO to meet working capital requirements for itself as well as its subsidiaries, GK Publications Pvt Ltd and Kestone Integrated Marketing Services Pvt Ltd.

It will also use about Rs 20 crore to pre-pay a debt of its subsidiary Career Launcher Infrastructure Private Ltd (CLIP). Besides, it will earmark about Rs 25 crore for acquisitions and strategic initiatives as well as for general corporate purposes.

In September 2014, CL Educate had sought a valuation of $130-140 million of a proposed IPO, according to VCCircle estimates.

It had finally shelved its IPO plans in April 2015.

On 30 March 2016, CL Educate had refiled a draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India (SEBI). It had received regulatory observations on 24 June last year.

Snapshot of the CL Educate IPO


The issue comprises sale of 4.76 million shares. Gaja Capital, the Mumbai-based private equity firm, will part-exit through the sale of 0.6 million shares, or 0.42% stake, in the company.

Gaja Capital first acquired CL Educate shares a decade ago and owns about 1.24% stake. It has  invested Rs 74.15 crore. Through the partial exit, the PE firm will fetch Rs 30 crore

The IPO will also see CL Educate’s chairman and executive director, Satya Narayanan R, as well as vice chairman and managing director, Gautam Puri, sell one-third of their holdings.

Merchant Banker

Kotak Mahindra Capital is the sole financial advisor to the IPO.


Shardul Amarchand Mangaldas & Co is representing as legal counsel for the company, while Luthra & Luthra Law Offices are legal advisors to the merchant bankers.


CL Educate started operations in 1996 as an MBA test preparation platform. Subsequently, it diversified across the education value chain, including test preparation and training under the Career Launcher brand; publishing and content under GK Publications; K12 schools had tie ups with 10 schools under the Indus World Schools brand; apart from vocational training programmes.

Satya Narayanan and Gautam Puri are the founders of the company, which is led by a team of IIT-IIM alumni. The company is also into recruitment, training and event management services for corporate houses through its unit, Kestone, according to the draft prospectus.

It has acquired a few companies in the past few years, including a strategic investment in Chennai-based Threesixtyone Degree Minds Consulting Pvt Ltd, which runs online higher education business under the 361minds brand, in 2010-11.

A year later, it acquired Delhi-based, which provides online coaching in all major subjects to class IX-XII CBSE students.

In November 2011, it entered the publishing space with the acquisition of GK Publications, which publishes niche test prep books, guides, mock test papers and question banks for popular professional and entrance examinations in India.

In September last year, CL Educate acquired a 51% stake in education startup Accendere Knowledge Management Services Pvt  Ltd for an undisclosed amount.

The company has raised institutional capital from a string of investors. Intel Capital, one of the initial investors in CL Educate, exited the company a long time ago. Later it raised Rs 35 crore from HDFC. Other small investors include Granite Hill, Edelweiss Finance and India Infoline Venture Capital.


CL Educate reported net profit of Rs 12.91 crore for the six months ended September 2016 on consolidated revenues (from operations) of Rs 153.15 crore.

The company’s net profit grew 2.07% year-on-year for 2015-16 to Rs 21.67 crore. Its consolidated revenue grew 3.33% to Rs 282.64 crore during the same period.

The company posted net profit growth of 36.66% year-on-year for 2014-15 to Rs 21.18 crore on a consolidated revenue of Rs 273.53 crore, which grew 25.12% from a year earlier.

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