Tuesday, July 19, 2011

Education sector to see $200 million PE, VC funding in 2011

Private equity (PE) and venture capital (VC) investors are bullish on the education sector and have invested US $93 million in 10 companies so far in 2011. The total deal size or investment in this sector is expected to touch $200 million in 2011 as compared with $183 million in 2010, said a report done by Venture Intelligence, which provides data and analysis on PE/VC and M&A activity in India.

Of the $93 million investments into this sector so far, the $22 million investment in vocational training and placement firm Teamlease Services is considered to be a big one. PE investments in the education sector increased from $129 million in 2009 to $183 million in 2010.

Some of the large deals in the sector include Premji Invest's $43 million investment in Manipal Education and India Equity Partners' $37 million investment in IL&FS Education and Technology Services, DE Shaw's $31 million investments into e-learning company Excel-Soft Technologies and Navi's Capital's $24 million investments into ITM Group, said the report.

According to the report, the education sector is the largest services market in India with a market size of more than 450 million students and $57 billion per annum (as of 2009). The landscape is primarily dominated by central and state governments funded and managed institutions with 80% of all schools being government schools. The government currently spends about 4% of the GDP on education, which has been increased to 6% to Rs. 270,000 crore (Rs. 2700 billion) from Rs. 43,500 crore (Rs. 435 billion) a few years ago.

The education industry in India can be broadly classified into the regulated segment (K12 and higher education) and the unregulated segment (pre-school, multimedia, ICT, coaching cases, vocational training and books).

Source: The Financial Express, July 19, 2011
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