Dubai-based Varkey Group Ltd has made an open offer to buy another 20 per cent stake in Everonn Education, which may require it to shell out another Rs 237 crore. Led by the Gulf-based entrepreneur Sunny Varkey, who owns one of the world’s largest private school companies, the Varkey Group acquired nearly 12 per cent stake in Everonn for Rs 138 crore through preferential issue. It had also picked up another 4.19 per cent stake through markets, thus triggering the open offer.
The $2.5 billion Varkey Group, which owns GEMS Education, an international school chain, has made the offer for a little over 4.48 million shares in the company. Consequently, the Varkey Group might become the single-largest shareholder in Everonn with its stake reaching up to 36 per cent. ICICI Securities is the manager to the offer.
The open offer has been made at Rs 528 per share, nearly 31 per cent premium to Everonn’s closing price of Rs 403.7 on Thursday. In the afternoon session, the shares of Everonn were trading at Rs 411.8 per unit on the BSE, up 2 per cent, after reaching an intra-day high of Rs 423.85. Since a little over 57 per cent stake in the company is held by non-promoter shareholders (as of June 2011), the issue has fairly low acceptance ratio at 35-36 per cent.
Major institutional shareholders in Everonn include New Vernon Capital (5.69 per cent), Morgan Stanley Mauritius Company (4.32 per cent) and Blackstone’s India Fund Inc. (2.28 per cent), among others.
At the time of the preferential allotment, Varkey had said that it was acting in concert with Everonn’s co-promoter SKIL Infrastructure Ltd, which owns 21 per cent stake in Everonn. SKIL, which filed for an IPO earlier this year and also raised $400 million from JP Morgan’s private equity arm, had picked up the stake in the Chennai-based knowledge management, education and training firm in 2010, for Rs 208 crore.
Varkey’s investment comes after Everonn’s co-founder and managing director P. Kishore was arrested by the CBI in an alleged bribery and tax evasion case. The news of the arrest, which came out last month, also led to the resignation of its chairman Dr Jamshed J. Irani, even as Everonn’s share price crashed to reach Rs 227 per unit.
After the arrest, Everonn’s board had appointed whole-time director Susha John as the chief executive officer (CEO) to exercise the powers delegated to the managing director. The board also appointed a business council consisting of two independent board members to advise the CEO.
Last year, Everonn said that it planned to open 300 schools by 2015 at a total investment of Rs 3,600 crore under its Ken Bridge brand. Varkey Group, which has over 100,000 students in GEMS Education schools hailing from over 100 countries, will certainly bring in the operational expertise for this expansion.