Zephyr Peacock invests in education loans firm Shiksha
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Chennai-based school financing company Shiksha Financial Services India Pvt. Ltd has received Rs 55 crore ($7.7 million at current exchange rates) in a round of funding led by private equity firm Zephyr Peacock, a company statement said.

The company’s existing investors Aspada and Michael and Susan Dell Foundation also participated in this round.

The firm will use the capital to finance the growth plans of the company and strengthen the management team. It is currently expanding its distribution operations to new states including Maharashtra, the statement added.

“Shiksha has pioneered an innovative lending model centered around the education sector and has disbursed 1,700 business loans to education institutions and 15,300 school education study loans to parents,” said V L Ramakrishnan, Shiksha’s chief executive, in the statement.

Founded in 2014, Shiksha Finance provides loans in the range of $500,000 to $10 million (Rs 5 lakh to Rs 1 crore) to affordable private schools, which use the loans for education infrastructure development. The company also provides loans to middle and lower-income families so that they can finance the school fees of their children. The loans, secured through social collateral, can be paid back through a repayment schedule. It currently operates in three states.

“Shiksha is uniquely placed in the education financing ecosystem as a lender to both schools and students. Its product offerings help improve the quality of affordable private schools and help children from low-income backgrounds access quality education,” said Pankaj Raina, managing director at Zephyr Peacock.

In November 2016, Shiksha secured about Rs 6.7 crore ($1 million) from The Michael & Susan Dell Foundation and Aspada.

Zephyr Peacock India

The PE firm is part of US-based Zephyr Management, which has sponsored at least 22 investment funds in public and private securities markets representing approximately $1.2 billion in combined commitments and assets under management.

The firm’s India division manages $200 million in assets across two venture capital funds. It has also made proprietary investments in the country when it began operations in 2006.

In September last year, VCCircle reported that the firm was expecting to mark the first close of its fourth fund and was seeking to raise up to $150 million (around Rs 1,000 crore) for the new fund, christened Zephyr Peacock India Growth Fund (ZPIGF).

The fourth fund will invest $5-15 million in companies in the financial inclusion, infrastructure ancillaries and food & agriculture sectors.

Zephyr has invested in eight companies from its third fund, Zephyr Peacock III (ZPIII), including 20Cube Logistics Solutions, Maverix Platforms, Pennar Engineered Building Systems, Swarna Pragati Housing Micro Finance, Thirumeni Finance, Trimax IT Infrastructure and Services and Utkal Tubers India. It will use the available dry powder from the fund to back its existing portfolio companies through follow-on rounds.

Deals in the space

Besides Shiksha, a number of non-banking finance companies focussing on lending to educational institutions have attracted investor interest.

In April 2018, Thirumeni Finance Pvt. Ltd raised $55 million in funding from home-grown private equity firm ChrysCapital.

In March last year, Auxilo Finserve Pvt. Ltd secured Rs 37.5 crore from sugar manufacturing company Balrampur Chini Mills Ltd.

In December 2017, Indian School Finance Company, an NBFC that provides loans to affordable private schools, was in advanced talks with a few fund managers to raise around $25 million in equity funding.

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