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Morgan Stanley PE, BanyanTree pump $75 mn into education services firm NSPIRA

11 July, 2018

NSPIRA Management Services Pvt. Ltd, which offers services in the education sector, has raised $75 million (around Rs 515 crore) from Morgan Stanley’s private equity arm and mid-market PE firm BanyanTree Capital.

VCCircle was the first to report last month that Morgan Stanley had roped in BanyanTree as a co-investor to ink what would rank among the biggest deals in the country’s education sector.

In a statement, NSPIRA said that a fund managed by Morgan Stanley Private Equity Asia (MSPEA) had pumped in around $67 million as primary capital for an unspecified minority stake in the company.

NSPIRA said it would use the fresh capital to fund both its organic and inorganic growth plans.

“We will be deploying the funds to scale our business geographically, increase our client base, develop cutting edge education products, modernise our facilities and scale up our digital business,” said NSPIRA’s managing director Puneet Kothapa.  

Anand Rathi acted as the sole financial advisor to NSPIRA on this transaction.

NSPIRA joins ed-tech startup Byju’s and Manipal Global Education in a select band of education firms to strike big-ticket deals. Byju’s has raised more than $200 million in external funding so far. Its $75 million round in 2016 led by Sequoia Capital and Belgium’s Sofina was the largest deal in the space.

Manipal Global Education had raised $142 million from PremjiInvest, the family office of Wipro Ltd chairman Azim Premji, in 2014, according to VCCEdge, the research arm of NewsCorp VCCircle. 

NSPIRA

NSPIRA is one of the largest management services players in the private education space in India. It offers its services to over 500 educational institutions with a student base of close to 400,000 across 13 states.

The company claims to be making significant strides in education curriculum development. In addition, NSPIRA also offers coaching services in the medical and engineering competitive examinations space.

“Education service is one of the core focus sectors for MSPEA across Asia,” said Morgan Stanley Private Equity Asia managing director Nirav Mehta. “We believe private education in India is poised for a strong growth phase, driven by the large demand-supply gap for quality education as well as by increasing disposable incomes and urbanisation,”

NSPIRA had previously raised about $60 million in structured debt from private equity firms Olympus Capital Asia Credit & CX Partners two years ago.

Education deals

In a potential big-ticket deal, VCCircle recently reported that serial investor Suresh Kalpathi was in talks with private equity firm AION Capital to buy out Hyderabad-based Varsity Education Management Pvt. Ltd, which offers operational and support services to educational institutes.

Last month, VCCircle reported that the Indian unit of British media and publishing company Pearson Plc. had exited Bengaluru school operator Cosmopolitan Educational Trust.

In May last year, EuroKids International Pvt. Ltd bought Kangaroo Kids Education Ltd in the biggest- known acquisition in the schools business in India.

In fact, BanyanTree was previously an investor in education services company MT Educare Ltd, which last year explored a deal with NSPIRA. The discussions didn’t make much headway, and in February this year school chain operator Zee Learn Ltd agreed to take control of MT Educare.

Morgan Stanley PE

The Wall Street firm established its PE business in India in 2008. However, it burnt its fingers with its first investment as the founders of castor oil manufacturer Biotor Industries were booked for fraud and the company went under water.

In June 2014, Morgan Stanley’s then managing director Aluri Srinivasa Rao had told VCCircle that the fund had made a soft commitment of around $250-300 million for India.

Earlier this year, Morgan Stanley Private Equity Asia invested Rs 152 crore ($23 million) in Southern Health Foods, which markets its products under the brand ‘Manna Foods’.

Along with this, the investment firm also led a Rs 230 crore ($36.23 million) round in medical devices maker Sahajanand Medical Technologies Pvt. Ltd in January.

Morgan Stanley PE had earlier invested in Janalakshmi Financial Services along with other investors such as TPG Capital.

Its other bets include Five Star Business Finance and Mumbai-headquartered pharmaceutical company ZCL Chemicals Ltd.

BanyanTree Capital

The Mumbai-based mid-market private equity firm typically makes structured investments in small and medium enterprises in India. It generally invests up to Rs 100 crore in a company.

BanyanTree recently hit the road to raise its third India-focussed fund and is likely to mark the first close of its third fund by the middle of this year. The size of the fund will likely be in the range of $150 million and $175 million. (Rs 974-1,136 crore).

It has so far been investing out of its second fund, BanyanTree Growth Capital II, which aimed at backing manufacturing and engineering companies in smaller cities.

The PE firm has at least half a dozen companies in the second fund’s portfolio. These include Kolkata-based hospital chain GPT Healthcare Pvt. Ltd, packaged food firm Nilon’s, Hyderabad spa chain O2 Spa Pvt. Ltd and power infrastructure service provider Power Mech Projects Ltd, agrochemical company Safex Chemicals India and Vijayawada-based non-bank lender Kanakadurga Finance Ltd.

In May, VCCircle reported that BanyanTree had put in around $5-7 million (around Rs 33-46 crore) in Fresco Global Pvt. Ltd, which primarily sells western clothes for women under the brand Zink London.

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Morgan Stanley PE, BanyanTree pump $75 mn into education services firm NSPIRA

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