Mumbai-based pre-school education service provider Tree House Education & Accessories has signed a memorandum of understanding for the sale of its land and building located at Vadodara in state of Gujarat for Rs 52.5 crore ($8.45 million), according to a stock market disclosure.
The particular property represents the second K-12 school land and building premises fully owned by the company, it said.
The sale of land is part of the company’s plans to monetise its physical assets while continuing to provide educational services from the same locations.
“This is the second step towards monetising out investments in physical assets of K-12 schools and moving towards an asset-light operating structure. We will use the proceeds to move towards a debt free status and deliver strong returns to all shareholders from the strong cash flows generated by the business,” Rajesh Bhatia, managing director of Tree House, said.
Promoters of the company—Geeta Bhatia, Rajesh Bhatia and Girdhari Bhatia—together own 28.94 per cent stake in the company, as on December 31, 2014, according to data available with the Bombay Stock Exchange.
The pre-school chain is backed by Omidyar Network, Foundation Capital, Matrix Partners and Aditya Birla PE, among others.
Multi-stage private equity firm Matrix Partners partially exited its investment in Tree House by selling 4.8 per cent stake or almost a fifth of its holding through open market transaction in December for about Rs 50.4 crore.
Tree House started business of providing educational services to K-12 schools in 2008 and currently has a portfolio of 24 large format K-12 schools apart from over 500 pre-schools across the country.
Shares of Tree House were trading at Rs 517.45, up 8.16 per cent at 12:10 PM on BSE from its previous close in a strong Mumbai market on Monday.