Academician and veteran value investor Shivanand Mankekar and his family have acquired a small stake in MT Educare, a Mumbai-based K-12 tutoring and test preparation firm, which made its stock market debut this week. Mankekars picked 2.2 per cent stake in the firm on the first day of listing at around Rs 90 a share. The shares were purchased from the open market for around Rs 8 crore ($1.5 million).
MT Educare scrip hit the upper circuit for the day on Friday to close at Rs 94.85 a share on the BSE, up 4.98 per cent in a weak Mumbai Market. The stock debuted at Rs 86.05 per share on Thursday in the bourses as against its public issue price of Rs 80. MT Educare raised Rs 99 crore through its initial public offering last month, which was oversubscribed 4.8 times. Nearly two-thirds of the issue involved a secondary sale, with India-focused private equity firm Helix selling most of its holding for Rs 64 crore.
Before the IPO, Helix owned 28.6 per cent stake in MT Educare, acquired when it invested 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 sold 8 million in the IPO and currently holds 5.25 per cent stake 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.
From the issue proceeds, MT Educare plans to use Rs 20 crore for land acquisition and construction of its pre-university college campus at Mangalore in Karnataka. Another Rs 5 crore is expected to be used for opening new coaching centres in 20 locations.
MT Educare offers coaching for Std IX-Std XII students, besides engineering and medical entrance tests, as well as CA CPT, CS, CWA and professional CA (IPCC & Final) exams. It has also diversified into
pre-school and day-care services through Global Champs. The company is headed by chairman and managing director Mahesh R. Shetty, who is the biggest shareholder in the firm with 42.88 per cent stake.
This is not the first company where Mankekars have invested in another PE backed firm or a PE firm has invested in a Mankekar backed company. Last year Carlyle invested in Mankekars-backed financial services firm India Infoline.