|  |  | 

India Top Headlines

Covid effect: more than 1,000 schools for sale in India | India News


HYDERABAD: More than 1,000 KG-Class 12 schools in the country are up for sale, hoping to raise an investment close to Rs 7,500 crore (approximately $ 1 billion) in the next two to three years, with the Covid-19 wave hitting India’s education sector hard.
Most of the offerings are private budget schools with an annual fee cap of Rs 50,000, shows data compiled by Cerestra Ventures, market leaders in the educational infrastructure sector. About 80% of school education in India is managed by this category of institutes.
“Many state governments have placed limits on the collection of fees, even when schools are expected to pay teacher salaries in addition to bearing other overhead costs. This has made staying afloat a struggle for these institutions, ”said Vishal Goel, a partner at Cerestra. A large school chain had to cut the salaries of non-teaching staff by up to 70%, he added.
“Even financing has become difficult to come by with financial institutions hesitant to make loans, due to a lack of clarity on how the situation will play out. That has added to their woes, “he added. Goel’s company has an expansive portfolio of 30 to 40 KG-Class 12 schools that he intends to acquire with an estimated investment of approximately Rs 1,400 crore.
Also looking for quality assets are established education companies with “a strong strategic interest,” said Prajodh Rajan, co-founder and group CEO of EuroKids International. The chain, which currently has more than 30 KG-Class 12 schools in India, is also aggressively on the prowl.
“In many cases, these schools have been affected because their developers 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,” Rajan added.
Between Karnataka, Maharashtra and Telangana there are at least 20 to 25 schools looking for potential buyers, said Rakesh Gupta, managing partner at LoEstro Advisors. The company had facilitated one of the largest school acquisitions of 2019: Oakridge International by Hong Kong-based Nord Anglia Education.
The Indian chain, with branches in Hyderabad, Visakhapatnam, Bengaluru and Mohali, was reportedly bought for Rs 1.6 billion. Now, given the drop, investors are forecasting a 30-40% drop in the cost of acquisitions.
But will this trend increase the cost of education? “I don’t think so. Although reopening a school may involve some additional costs, everyone in the sector is responsive to students. I don’t see the fee structures crossing a certain threshold,” Rajan said.
The acquisitions could bring more stability to education in India, says RMC Reddy, Managing Director and CEO of Schoolnet India Limited, a pioneer in educational technology. “Since these financial institutions and school chains have deeper pockets, it will also help bridge the technology gap that is currently deep between top-tier schools and low-budget private schools,” he said.

Original source