Stationary products maker and publishing firm Navneet Publications is investing over Rs 45 crore in Sequoia Capital-backed K-12 Techno Services Pvt Ltd, in what will be the third round of funding for the Hyderabad-based school management company.
K-12 will use the fund to launch its services across five different states and is targeting to manage over 200 schools in the next three-four years, according to Navneet Publications.
“The affordable school segment is a large market opportunity that remains largely untapped across the country and with the partnership with K12, we see an excellent opportunity to service this market and improve the quality of education delivery at affordable prices,” said Sunil Gala, president (finance) of Navneet Publications.
Navneet and K-12 will also work closely with schools in Maharashtra and Gujarat by leveraging Navneet’s market strength and K-12’s expertise in this domain.
Shares of Navneet Publications were trading at Rs 67.35 per unit on the BSE at 1:30 pm, up 2.28 per cent from the previous close.
“Navneet’s experience with the education fraternity for over five decades will further enable K-12 to tap newer geographies relatively faster as we look to expand outside Andhra. We look forward to our next phase of expansion with the continued support of Sequoia as financial partner and Navneet as a strategic partner to the company,” K12 chairman M. Venkata Narayana commented on the new partnership.
K-12 Techno Services is a Hyderabad-based school management company servicing around 70 schools under the Andhra Pradesh state board, which are run by several trusts. These institutions in the affordable education segment run under the Gowtham Model Schools (GMS) and Orchids brands. In addition, K-12 also manages 10 junior colleges and an international school.
In March this year, K-12 received a second round of funding worth Rs 25 crore from Sequoia Capital. The proceeds are used to modernise its facilities and expand its current network by adding another 25 schools across Andhra Pradesh. Last September, Sequoia Capital and Song Advisors had together invested $15 million in K12 Techno Services.
Education service firms have been attracting funds from both strategic corporate investors as well as private equity firms.
The education sector has seen an increasing interest from PE players, with investments of $190 million across 23 deals in 2010, as compared to 10 deals worth $128 million in 2009, according to VCCedge, the financial research platform of VCCircle.
There are several education-focused PE funds, as well as generic growth capital funds, who are now eyeing this space. For instance, Kaizen Private Equity, which is raising a $100 million fund for the sector, has secured funding from HDFC, India’s largest mortgage lender, and World Bank body International Finance Corporation (IFC). Another player is Milestone Religare, with dual focus on education and healthcare.
In March last year, Nikhil Gandhi-led infrastructure firm SKIL acquired a significant minority stake, thereby becoming a co-promoter of Chennai-based Everonn Education Ltd. Incidentally, Everonn, backed by investors like New Vernon Capital and Blackstone’s India Fund Inc., is facing flak since its co-founder and managing director P Kishore has been arrested by the CBI in an alleged bribery and tax evasion case.
Earlier this month, private equity firm Ascent Capital Advisors also invested Rs 150 crore in Hyderabad-based Oakridge International School for an undisclosed stake.