Thursday, October 04, 2012

Manipal Global to return 72%+ for early investors

Manipal Global, the Rs. 1,000-crore (Rs. 10 billion) higher education services provider from the Manipal group, is closing in on a deal to provide healthy exits to its private equity investors IDFC Private Equity and Capital International.

In 2006, the two investors pumped in $70 million in Manipal Global for a 12 per cent stake, and it is understood the two private equity players might get $120-130 million from the exit, valuing the company at about $900 million.

Two investment bankers privy to the transaction indicate US-based $2-billion DeVry Inc, which runs a clutch of educational institutions, may consider investing in Manipal Global. Earlier, Manipal Global had tried to tap the public markets with an enterprise valuation of $1 billion, but the plan did not materialise, as the markets were not conducive.

Ranjan Pai, Managing Director and Chief Executive, Manipal Global, said the company was preparing to provide an exit to IDFC PE and Capital International. However, he denied any interest from DeVry Inc. “A lot of global players in the education space come and talk to us. It may not necessarily be for an investment in Manipal Global. They may want to understand the market and, as part of the process, they discuss with us,” he said.

DeVry is an NYSE-listed organisation and a provider of educational services. It is the parent organisation of Advanced Academics, American University of the Caribbean School of Medicine, Becker Professional Education, Carrington College, Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University Schools of Medicine and Veterinary Medicine. These institutions offer an array of programmes in business, healthcare and technology.

Pai, from the Manipal Group’s promoter family (which runs the not-for-profit Manipal University in Karnataka), added the company would raise resources on its own strength and buyback the stake held by two PE investors. It is understood Ernst & Young is advising Manipal Global on this transaction and the deal is expected to be completed by the end of December. Investment bankers said for the transaction, Manipal Global had held talks with Pearson, as well as Mukesh Ambani-led Reliance Group, but could not make much headway. Pai, however, said the company wasn’t scouting for a strategic investor. DeVry Inc did not respond to queries.

Manipal Global had also raised Rs. 2 billion each from Premji Invests and Catamaran Ventures, owned by Infosys co-founder Narayana Murthy.

Manipal Global’s operating margin stands at about 30 per cent, while its debt is Rs. 5 billion. It has campuses in Antigua, Dubai, Malaysia and Nepal, besides the Sikkim Manipal University (SMU) in India and a slew of 30 institutions that focus on executive and vocational development. It is understood Manipal Global may consider the private equity route for its planned expansion in Sri Lanka and Africa.

Manipal Global Education Services has made strategic investments in emerging companies, including MeritTrac, a pan-India skills assessment and testing company, and U21 Global, a global online graduate school. Manipal Education has also joined hands with City & Guilds to offer a skills training programme called IndiaSkills. On its investment in TutorVista, Manipal Global recorded a blockbuster exit, when Pearson acquired the majority stake in two steps, paying about Rs. 6.5 billion for a stake of 76 per cent in the company.

Source: Business Standard, October 4, 2012

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