PE, VC investment in education touches $93 mn in 2011

Private equity and venture capital investors have pumped $93 million into 10 education companies so far in 2011 and are bullish about the sector's prospects going forward.

According to Venture Intelligence, PE/VC investors have already invested $93 million in 10 education companies so far in 2011, led by a Rs 100 crore (about $22 million) investment in vocational training and placement firm Teamlease Services.

PE investment in the education sector increased from $129 million in 2009 to $183 million in 2010.

Some of the recent large deals in the sector include PremjiInvest's $43 million investment in Manipal Education and India Equity Partners' $37 million investment in IL&FS Education and Technology Services.

Investments in the education sector continued to witness growth through the 2008-09 downturn and factors such as the demand-supply gap, higher spending by consumers, superior quality perception of private sector offerings and government reforms are set to drive growth of the industry further.

However, regulatory hurdles, the lack of exit routes and a shortage of management and faculty talent are some of the constraints that are hampering investment in this space, the report noted.

Of the $183 million of PE investment in the education space in 2010, around 70% was raised by businesses in the non-regulated space (pre-schools, tutorials, test preparation and education services), an indicator of the complexity involved in investing in the regulated sector.

India has the third largest education system globally, after China and the US, with one million schools and 18,000 higher education institutions.

With a population of around 540 million in the 0-24 age bracket, it is also the largest education market in the world. However, the landscape is primarily dominated by central and state government-funded and managed institutions, with 80% of all schools being government-owned.