IDFC PE set to fuel Manipal Group's student living arm

IDFC Private Equity, the Rs 3,000-crore private equity fund, has invested Rs 100 crore in Manipal Group’s facilities management company — Manipal Service Corp Facilities Management — for a significant minority. The facilities management company has revenues of Rs 130 crore and is part of the Bangalore-headquartered Manipal Education and Medical Group. It is profitable and would use the fresh resources from IDFC Private Equity to expand into the student housing segment.

Raja Parthasarathy, partner, IDFC Private Equity, told Business Standard that the facilities management activities would continue to operate but over a period of five years, the share of revenues from this business would come down to 25 per cent. “We are repositioning this company as a student housing company, a segment which is not organised in India. To start with, we are putting up three projects at MEMG’s units with an investment of Rs 100 crore for around 2,500 beds,” Parthasarathy added. According to information available, the three projects will be at Jaipur, Manipal and in Bangalore, and expected to be ready by June 2013.

According to him, they have drawn out a roadmap for the next five years in which they will be putting up around 20,000 beds and the average cost will be in the range of Rs 2,000 per square feet. “We may look at joint development or leasing or outright purchase depending on the opportunity as we look to roll out. The first three projects will be a good showcase for us to project ourselves for third party contracts based on which the growth curve, hopefully will be steep,” he added.

The facilities management company at present has a small debt and an additional line of credit of around Rs 600 crore, which will be used based on the equity infusion from IDFC PE.

“Depending on the flow of orders from other colleges and universities, we have an option to infuse another Rs 50 crore equity within end of 2013, based on which there will be further growth,” Parthasarathy added.

This is the third time IDFC Private Equity is taking an exposure in MEMG after having invested both in healthcare and education businesses of the group.