As Covid crisis has hit the education sector hard, more than 1000 kindergarten (KG) to class XII schools across the country are up for sale. With this they are hoping to pool in an investment of close to Rs 7500 crore (roughly $1billion) in the next two to three years.

According to the data compiled by Cerestra Ventures, market leaders in the education infrastructure sector, mostly on offer are private budget schools with an annual fee cap of Rs 50,000. About 80 percent of school education in India is catered to by this category of institutes.

Vishal Goel, partner Cerestra said, “Many state governments have put caps on fee collection even as schools are expected to pay salaries to teachers apart from bearing other overhead costs. This has made staying afloat a struggle for these institutions.” He added, “One large school chain had to slash non-teaching staff salaries by upto 70 percent.”

Goel pointed out, “Even funding has become difficult to come through with financial institutions hesitant on lending, owing to lack of clarity over how the situation will pan out. That has added to their woes.” Cerestra Ventures has an expansive portfolio of 30 to 40 KG to class XII schools that it is eyeing to acquire at an estimated investment of about Rs 1400 crore.

Prajodh Rajan, co-founder and group CEO of EuroKids International said that also scouting for quality assets are established education companies with ‘strong strategic interest’. The chain that currently has 30 + KG to class XII schools in India, is also aggressively on the search. He added that in many cases these schools have taken a hit because its promoters have a diversified portfolio such as real estate and the adverse impact on their other businesses has had an effect on the balance sheet of the schools.

Rakesh Gupta, managing partner of LoEstro Advisors said, “Between Karnataka, Telangana and Maharashtra  there are at least 20 to 25 schools that are looking for prospective buyers.

The Indian chain with branches in Hyderabad, Visakhapatnam, Bengaluru and Mohali was reportedly purchased for Rs 1600 crore. Presently, given the slump investors foresee a 30 to 40 percent drop in the cost of acquisitions.

Source: The Times of India

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