Hyderabad-based education-focused group Narayana, which runs hundreds of schools, colleges and coaching classes across the country, is looking to buy out private equity investors Morgan Stanley Private Equity Asia and BanyanTree Finance from its group firm Nspira Management Services for approximately Rs1400 crore, sources aware of the group’s plans told ET.
Morgan Stanley PE and BanyanTree invested $75 million in Nspira in 2018, with Morgan Stanley leading the round with a $67 million cheque. The two private equity investors currently hold a 20% stake in Nspira. Morgan Stanley holds a little over 18% stake with BanyanTree holding the rest.
Founded in 1979 by Dr. P. Narayana with one coaching centre, today the group has expanded to over 750 schools, colleges, coaching centers, and professional colleges across 23 Indian states. The group employs a team of over 50,000 teachers and staff and caters to education needs of over 600,000 students every year, from kindergarten to post-graduate studies.
The group has a strong geographical presence in the states of Andhra Pradesh and Telangana, and is among the top 10 biggest school chains in the country. The group derives a major portion of its revenue from tuition fees for 11th and 12th standards as the institution has a strong reputation for success rate in professional entrance exam courses such as National Eligibility cum Entrance Test (NEET) and Joint Entrance Exam (JEE).
Nspira provides end-to-end solutions for various requirements of the Narayana group’s educational institutes such as staffing, organizational development interventions, IT infrastructure, sales and marketing, facilities management, as well as the entire administrative function.
“Narayana group has decided to buy out the stakes held by the two PE firms and they are engaging in talks with various foreign banks to raise structured debt of around Rs1,400 crore at a group entity, which will predominantly be used to buy the Nspira stakes held by Morgan Stanley and BanyanTree. A small portion is likely to be used to fund discretionary spending for other group entities,” said one of the sources.
Source: Economic Times