Radcliffe to raise Rs 300 crore from PE players

Radcliffe Foundation, a New Delhi-based educational trust operating in the K-12 (kindergarten to 12) segment, is in talks with private equity players to raise funds and expand its operations in the K-12 segment.

Radcliffe Foundation — an arm of the Rai Foundation which runs business and schools for technical education — plans to spend around Rs 300 crore for setting up a nation-wide network of 150 schools in the next five years.

“Looking at the school education in the country, there is huge potential. Plan to tap into the same and expand to a network of 150 schools in the next five years,” said Nymph Kaul, Managing Trustee, Radcliffe Foundation.

 

The foundation is looking at raising funds by a combination of private equity and debt. “We would be raising around Rs 150 crore in the next financial year and the balance a year after,” Kaul added. She however, declined to comment on what part of the funds would be raised via private equity placement and debt.

Sources say Edelweiss Capital is advising Radcliffe on the deal. Radcliffe foundation runs around 18 schools in the country at present. With the fresh funds raised, it would get into the Tier-II cities.

The foundation is also said to be in talks with real estate developers including Unitech and Omaxe to lease out buildings in the townships to be built by these developers. All the schools are expected to be up and functional by 2014-15, she added.

According to sector analysts, K-12 is the most attractive segment of the education market as a student once acquired, generally remains in the school for the next 12 years.

Industry observers say the K-12 segment will be the direct beneficiary of the rising income of the middle class in India. The segment is highly fragmented with too many players. While each player has his distinct geography, more pan-India players will emerge in the next decade.

Analysts say that by 2013, the segment will see a Compound Annual Growth Rate (CAGR) of 20 per cent and a volume growth of 8 per cent.

“The K-12 segment will see a significant growth as parents prefer a lower pupil teacher ratio in schools. While the pupil teacher ratio in Indian schools is 40:1, in most developed countries, it is 25:1,” said a Mumbai-based analyst.

Radcliffe’s schools will be affiliated to the Central Board of Secondary Education. The school will charge a tuition fee of Rs 3,500 a month, excluding the cost of bus services and uniform.