Test prep firms seem to be scoring a perfect ten with investors. FIITJEE, an IIT test preparatory firm, is raising its next round of Rs 400 crore in private equity, in a possible deal that values the firm at Rs 2,000 crore, sources with direct knowledge of the deal told VCCircle. It is learnt that the promoters of the company are also selling about 10-15% stake in the firm. Only in 2009, FIIT JEE,  a leader in IIT entrance coaching, raised Rs 100 crore from Matrix Partners, a Mumbai based venture capital firm. Matrix owns about 10% in the company.

Avendus Advisors Private Limited is understood to be running the deal.

An email sent to DK Goel, Founder, FIITJEE, did not elicit any response at the time of writing this article.

Acccording to VCCedge, the PAT for the company is Rs 20.39 crores for 2009-10 up from Rs 17.9 crores in 2008-09 and Rs 10.32 crores in 2007-08. The company has grown year on year basis. It has minimal debt on its balance sheet. opearting at a healthy EBITDA margin of 31.3%.

The company will use the monies to build a pan-India presence and also transition into formal education the way peer firm Career Launcher has done in the recent past.  FIIT JEE was founded in 1992 by Dinesh Kumar Goel, an IIT Delhi graduate. A company statement claims that 25,000 of its students have been selected to various IITs since its inception.

There have been many PE investments in the education space in the recent past. Some investments in the space include : Sequoia Capital India, Song Investment Advisors India Pvt. Ltd. putting $15 million into K-12 Education Centre, Mayfield Fund putting $8 million into Centum Learning Ltd and Matrix Partners India, Foundation Capital investing $1.38 million into Tree House Education & Accessories Pvt. Ltd.

According to a recent E&Y report on education, the Indian higher education system has established itself as one of the largest in the world, in terms of number of institutions and student enrolment. Higher education spends in India are currently estimated at Rs 46,200 crore and are projected to grow to nearly Rs 150,000 crore in the next 10 years.

Growing global integration and changing macro-economic trends are influencing the composition and preferences of students, leading to new demand-side realities. These include increasing spends on education, new categories of students, willingness to pay for academic quality, increasing demand for global education and demand for employability-linked education.

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