Online tutoring-to-formal school enterprise TutorVista Global Pvt Ltd has attracted interest from a bevy of marquee global and domestic funds such as Temasek, New Enterprise Associates (NEA), ICICI Ventures and Barings Asia among others as it steers through a $50-million fund-raising exercise.
TutorVista Global, founded by serial entrepreneur K Ganesh, has mandated Ernst & Young (E&Y) for the exercise. The firm may be looking at roping in one private equity investor, with an appetite to make a big investment, and also raise some amount from its existing investors.
The firm is expected to shortlist about 2-3 investors as early as next month before deciding on the preferred suitor. Other funds including another Singapore state investor GIC, Standard Chartered PE and Multiples have held meetings with TutorVista.
British publishing major Pearson and Manipal Education and Medical Group (MEMG) are minority investors in the firm along with private equity funds Sequoia Capital and Lightspeed Ventures. These investors hold 55% stake in TutorVista while Ganesh and his management with stock options hold the rest. TutorVista holding entity has so far raised $38 million in its previous rounds and the proposed round will take the total fund-raising value to $88 million.
An emailed query to TutorVista Founder & Chairman K Ganesh remained unanswered at the time of posting this report.
One source said, the firm was expecting a pre-money valuation of around $200 million. The reason TutorVista has attracted a big lineup of investor interest could be driven by the fact that the India education story is red-hot coupled with availability of few scalable businesses. Besides, what could also work in favour of TutorVista is that it is backed by an entrepreneur with a proven track record having being involved in the setting up and scaling of three businesses in his career span so far (TutorVista, CustomerAsset and Marketics).
TutorVista, which straddles four segments in education space, would be eyeing a financial investor with a mandate to look at both the India education story as well as the consumer internet business. TutorVista started off as an online tutoring service providing leveraging on technology and cost arbitrage catering to students in the US. That part of the business has gained significant traction, is profitable and not capital-guzzling. So, valuations could be more aligned to the consumer internet part of the business.
The recent success of Makemytrip IPO may have a ripple effect on emerging and fast-growing Indian internet enterprises, said one source. Besides, these asking valuations could be seen in the context of listed comparable Educomp, an integrated education service provider, with a market cap crossing $1 billion.
“Valuation will be concern always. But the education story is hot and the firm is backed by entrepreneurs with proven track record,” another source said.
TutorVista also focuses on segments targeting the domestic story in areas such as digital learning content, brick-n-mortar tutorial centres and formal schools. It is the domestic business that will be capital intensive and would see lion’s share of deployment from the $50-million fundraise as TutorVista plans to roll up to 100 formal schools (through the acquisition route), set up 170 brick-n-mortar tutorial centres in 10 states (from two currently) and expand ICT framework in private schools.
TutorVista has also been M&A-savvy to grow the domestic business. It acquired Edurite Technologies to foray into digital class rooms and other e-learning solutions. It is now the second largest player in this market after Educomp. Edurite also teamed up with Manipal Education to enter the K-12 school segment, and uses the Manipal brand to own and manage schools spread across Bangalore, Pune, Hyderabad, Mangalore, Gurgaon and Nepal currently. Similarly, it took over Tandem, a network of tutorial centres in Kerala, to develop a chain of tutorials that are technology enabled and not centered around one star teacher.