Mumbai-based pre-school education service provider Tree House Education & Accessories Ltd is looking for buyers to dispose of land and buildings of its four schools, The Hindu reported.
The company will use the money for expanding its pre-school network and cutting down its debt. Tree House Education had a debt of Rs 66 crore at the end of March this year. The proposal has already been approved by the company’s board.
“We are talking to people who may be interested to acquire these assets. We have also sounded out to leading real estate consulting firms to arrange buyers. Currently, the return on capital employed is 14 per cent, and after the sale of these assets, this can go up substantially. This will be in the interest of shareholders,” Tree House Education’s Managing Director Rajesh Bhatia told the newspaper.
However, the company will continue to manage the schools; only the ownership of the assets will change. Two of these schools are located in Baroda while one each at Jhunjhunu in Rajasthan and Goregaon in Mumbai. In the books of Tree House Education, these assets are currently valued at Rs 75 crore.
“Becoming asset light will increase the efficiency of capital employed and free capital for future growth. We have not set any target (towards sales realisation),” he said.
The pre-school chain is backed by four private equity players—Omidyar Network, Foundation Capital, Matrix Partners and Aditya Birla PE—which together hold 38 per cent stake.
Promoters of the company—Geeta Bhatia, Rajesh Bhatia and Girdhari Bhatia—together own 29.27 per cent stake in the company, as on September 30, 2013, according to data available with the Bombay Stock Exchange.
The company, which started in 2003, currently has 426 centres across 55 locations, of which 322 are operated by the company.
Over the last four years, the pre-school chain has been adding 80 schools every year and is looking to add 230 self-operated schools and 120 through franchisees by the end of fiscal 2016. In the southern parts of the country, it has 20 schools in Bangalore, 12 in Hyderabad and three in Chennai.
(Edited by Joby Puthuparampil Johnson)