Matrix Partners exits Tree House Education

Multi-stage venture investor Matrix Partners has exited Mumbai-based pre-school education service provider Tree House Education & Accessories Ltd by selling its entire stake in the company through open market transactions.

The venture capital firm that divested its remaining stake of a little over 10 per cent early this week, had sold around 2 per cent in the past few weeks, a regulatory disclosure showed.

It did not share further details but is estimated to have wrapped up its almost eight-year-old investment with around Rs 180 crore or just under three times the investment amount, as per VCCircle estimates. Matrix had part exited with much juicier returns in the last year or so. Tree House scrip has lost over three-fourth of its value over poor earnings and a proposed merger with Zee Learn that is unfavourable to its own shareholders.

Matrix, the earliest investor in Tree House, had initially backed the firm in 2008 and later brought in more cash in multiple tranches including a pre-IPO transaction in 2011.

Omidyar and Foundation Capital are the other investors in Tree House.

Led by its founder Bhatia family, the firm is the largest self-run chain of pre-schools in the country. Zee Learn runs the largest playschool chain but is almost entirely a franchisee-driven business.

The company has about 730 pre-schools across the country. It started providing educational services to K-12 schools in 2008 and has a portfolio of 24 large format K-12 schools in western India.

In the third quarter ended December 31, 2015, the company's revenues grew a mere 5 per cent and net profit more than halved to Rs 6.12 crore from a year earlier. Tree House blamed the poor earnings to its expansion in Delhi-NCR where operating costs are higher and said revenue growth was challenging due to poor mid-session admissions.

On Wednesday, shares of Tree House closed at Rs 92.10 each, up 5.80 per cent on the BSE in a weak Mumbai market. 

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