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

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

Raja Parthasarathy, Partner, IDFC Private Equity told Business Standard that the facilities management activities will continue to operate but over a period of five years, the share of revenues from this business will come down to 25%.  “We are repositioning this unit as a student housing company, a segment which is  not organised  in India. To start with we are putting up three projects at Manipal Education 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, which is expected to be ready by June 2013.

According to him, they have drawn out a road-map 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 around 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 currently has a small debt and has an addition 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 that IDFC Private Equity is taking an exposure in MEMG after having invested both in healthcare and education businesses of the group. While IDFC PE has completely exited the healthcare business, it is in the process of exiting the education business.