Matrix Partners-backed pre-school management company has struck a deal to acquire the pre-school business of MT Educare, a Mumbai-based K-12 tutoring and test preparation firm, for an undisclosed amount.
As per the MoU, “Tree House will buy its pre-school division, comprising six company-operated centres located in Mumbai and Pune. The transaction will be closed after the usual due diligence.”
MT Educare is backed by private equity firm Helix Investments, which made 2.5x returns in the part-exit from its four-and-a-half-year-old investment when the firm floated its shares in the stock market. The company raised $22.04 million through its initial public offering in March this year.
Prior to the IPO, Helix owned 28.6 per cent stake in MT Educare, which was acquired when it invested Rs 32.8 crore ($8 million) in 2007. The investment was initially made through compulsorily convertible preference shares, which were converted in March 2009. Of the 10.07 million shares, Helix sold 8 million in the IPO and currently holds 5.25 per cent stake in the company.
MT Educare offers coaching for Std IX-Std XII students, besides engineering and medical entrance tests, as well as for CA CPT, CS, CWA and professional CA (IPCC & Final) exams. It has also diversified into pre-school and day-care services through Global Champs. The company is headed by chairman and managing director Mahesh R. Shetty, who is the biggest shareholder in the firm with 42.88 per cent stake.
Tree House is a five-year-old firm founded by the Bhatia couple, Rajesh and Geeta. It started operations in 2007 and runs pre-schools under the brand Tree House. The company has also diversified and provides educational services to K-12 schools.
Last August, Tree House got $3.76 million in funding from Investment Professionals Ltd and Axis Asset Management Company Ltd. Prior to that, Foundation Capital, Omidyar Network India Advisors Pvt Ltd and Matrix India Fund invested $4.25 million in the firm for 11.46 per cent, 3.52 per cent and 35.64 per cent stake, respectively. The company also received $5.6 million from FC VI India Venture (Mauritius) Ltd and $1.6 million from Matrix Partners Investment Holding, LLC, in 2010.