Thursday, September 06, 2012

IAN invests in Aurus Network; Kaizen backs Altus Learning

In two separate investments that indicate the growing popularity of education-related businesses with investors, India’s largest angel investors group, Indian Angel Network, invested an undisclosed amount in Delhi-based virtual classroom solution provider Aurus Network Infotech Pvt. Ltd and India’s first education-focused private equity (PE) fund Kaizen Management Advisors Pvt. Ltd. has invested Rs. 250 million for a minority stake in school management firm Altus Learning Pvt. Ltd.

Investments in the education sector recorded a 100% growth to $71 million in April-June 2012, from $37 million in the second quarter of calendar year 2011, as investors preferred the unregulated space such as test preparation, vocational education and pre-schools, according to PwC MoneyTree India, a quarterly study of private equity investment activity in the country published by consulting firm PricewaterhouseCoopers.

Founded in July 2010, Aurus Network has raised funding from IAN investors, including former HCL Infosystems Ltd. Chairman Ajai Chowdhry, and former chief executive of Yahoo! India (Research & Development) Sharad Sharma. The start-up has a cloud based virtual classroom solution which connects teachers with students across the country, eliminating the need for hardware based video conferencing or satellite based equipment and networks and works at Internet speeds as low as 75kbps. It currently has tie-ups with more than 20 test prep and training centres.

“One can access this solution for attending classes from home with a tablet PC or laptop,” said Piyush Agarwal, Founder and Chief Executive of Aurus Network. The funds raised will be used by Aurus for developing a better R&D centre and expanding its sales and marketing team. The firm is also planning to expand its operations globally, beginning with Africa. Chowdhry sees businesses using the firm’s solution too. “Enterprises can use this solution for training their staff. For industries such as insurance and retail, where new products are launched frequently, it is a cost effective training solution,” he said.

Ahmedabad-based Altus Learning is a school management and services provider for preschools and schools. The five-year-old firm has so far worked with seven green-field schools and nine preschools. Currently, it is in talks with 10 more schools and pre-schools. “With the funds that we have raised, we plan to expand into North India as well as outside Gujarat,” said Manjula Pooja Shroff, Managing Director, Altus Learning.

“Management of schools is a wide space where not many companies are active right now,” said Jetu Lalvani, Executive Director, Kaizen Management. In June, Kaizen invested Rs. 200 million in Bangalore-based child-care services provider Your Kids ‘R’ Our Kids (India) Pvt. Ltd., which has a unique model of forging partnerships with institutional customers to offer child-care services to their employees. There is a reason why investors prefer pre-schools and on-line education, said two experts.

“Private equity investments in India have over the last two years suffered from both regulatory and valuation fatigue. K1-K12 (Kindergarten to Class 12) and the university education space are highly regulated, and it has been tough to meaningfully structure deals in that segment,” said Sanjeev Krishan, Executive Director & Partner, Transactions Group, PricewaterhouseCoopers.

“It makes sense for private equity investors to explore opportunities in pre-school, online education and tutorials space as there are no regulations per se and the operating models are scalable. There have been several investments in this space such as, Tree House, Educomp, Resonance, Mahesh Tutorials and many others,” said Sunil Goyal, Managing Director and Chief Executive of Mumbai-based investment bank Ladderup Corporate Advisory Pvt. Ltd. He, however, added that investment in companies targeting secondary and higher secondary education and junior colleges may face certain regulatory challenges. “There have been various structures that has been tried to be implemented. However, considering the current regulatory environment no such structure can remain sacrosanct vis-à-vis regulatory changes for a longer period,” Goyal said.

Source: Mint, September 6, 2012

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