Sequoia Capital India along with Song Investment Advisors have invested $15 million (Rs 70 crore) into K-12 Techno Services Pvt Ltd, a firm that manages a network of over 50 schools owned by Hyderabad-headquartered Gowtham Educational Institutions.
Sequoia is leading the investment into K-12 Techno, an infrastructure and technology firm that manages schools, as the domestic regulatory environment prohibits investor ownership of not-for-profit educational assets. Gowtham is among the top three private educational groups in Andhra Pradesh.
The investment will be deployed for expanding Gowtham's network of model schools across India, sources directly familiar with the development said. Gowtham owns schools, junior colleges and an international school with over 50,000 students on its rolls.
This marks Sequoia's second investment in India's education sector. It is already an investor in TutorVista that is rolling out K-12 schools in a joint initiative with Manipal Education. Sequoia Capital has around $1.8 billion under management across three venture capital funds and two growth capital funds.
For Song Advisors, which is backed by search giant Google, Soros Economic Development Fund and Omidyar Network, this will be its debut deal. Song Investment Advisors manages a $17-million fund and is focused on sectors like education and training, agriculture and food and healthcare.
"SONG along with Sequoia have invested in Hyderabad-based end to end affordable K12 school and technology management company. The company currently manages affordable schools for 14+ societies and is also a manager of Gowtham Model School brand. The mission of the company is to help quality education reach the mass market consumer segment. We will make a formal announcement in few weeks," said Vishal Vasishth, founder and managing director of Song Investment Advisors, when contacted by VCCircle.
An email to Sequoia Capital remained unanswered at the time of posting this report. Amarchand Mangaldas was legal advisor to the transaction.
The deal would be the second investment in school business in recent times. Reliance Equity Advisors, the PE arm of Anil Ambani's Reliance Capital, invested Rs 100 crore in Pathways World School in May. India's K-12 segment is a $20-billion market growing at a compounded
annual growth rate (CAGR) of 14%, said a report by education-focused PE firm Kaizen Management Advisors. Factors like large and growing population, inefficient public system and preferences for private schools and colleges is driving this sector.
This calendar year has already seen 11 deals worth $149 million in less than six months, 70% higher than the total investments of $88 million across five deals witnessed in the whole calendar 2009, according to VCCEdge, the financial research platform of VCCircle. The largest deal came when PremjiInvest put $44 million in Manipal Universal Learning Pvt Ltd.
On Wednesday, VCCircle reported that TutorVista was entering the market for raising $50 million for expanding its multiple education services including K-12 schools, digital classrooms and network of tutorial centres.