<MT Educare, a Mumbai-based K-12 tutoring and test preparation firm, has seen its initial public offering oversubscribed more than 4 times. The IPO closed on Thursday. MT Educare is backed by India-focused private equity firm Helix Investments who would be making 2.5x returns (on the upper end of the price band) in the part-exit from its four-and-a-half-year-old investment.
MT Educare had launched the maiden public float with a mix of fresh issue and offer for sale by the financial investor. The company was looking to raise up to Rs 35 crore ($7 million) through fresh issue of shares. The issue was priced at Rs 74-80 a share.
Even as all three investors class — QIB, HNIs & Corporates and Retail Investors — fully subscribed to their portions of the issue, HNIs led the bids for the shares.
Helix currently owns 28.6 per cent stake in MT Educare, which it had acquired by investing Rs 32.8 crore ($8 million) in 2007. The investment was initially made through compulsorily convertible preference shares, which were converted in March 2009. Of the 10.07 million shares, Helix was to sell up to 8 million in the IPO or around 80 per cent of its holding in the company.
Other portfolio companies of Helix include power electronics player Hi-Rel Electronics, calorie-counted meal delivery service Calorie Care, medical transcription outsourcing provider OSi and e-learning solutions firm LearningMate. Helix, which eyes deals between $5 million and $15 million, is a $100 million fund sponsored by Culbro LLC (the private equity investment vehicle of the Cullman family of New York) and Bloomingdale Properties.
Enam Securities was the book running lead manager to the issue.
From the issue, MT Educare plans to use Rs 20 crore for acquisition of land and construction of its pre-university college campus in Mangalore, Karnataka. Another Rs 5 crore is expected to be used for opening new coaching centres in 20 locations.
MT Educare operates across Maharashtra, Tamil Nadu, Karnataka and Gujarat, through 188 coaching centres in 110 locations. Out of these, some are operated on a franchisee basis. The company offers coaching for classes IX-XII, engineering and medical entrance tests, CA CPT, CS, CWA and for professional CA (IPCC & Final) exams. MT Educare has also diversified into pre-school and day care services through Global Champs. It is headed by chairman and managing director Mahesh R. Shetty, who is the biggest shareholder in the firm with 48.21 per cent stake.
For the year ended March 31, 2011, MT Educare’s total income stood at Rs 107.6 crore with net profit of around Rs 8 crore. At the upper end of the price band, the company is eyeing a valuation of Rs 315 crore ($63 million) or a little over 39x its one-year-old earnings.