Manipal Global Education Services, the Rs 1,200 crore higher education major, is looking to spin off its overseas arm into a separate entity. The overseas arms with operations in Malaysia, Nepal, Antigua and Dubai contribute as much as 55 per cent to the revenues and this will be the precursor to raising $100 million through the private equity route in the overseas arm. According to investment bankers who are close to the development, Manipal Global is looking at setting up an integrated campus in Sri Lanka and is also considering one in Africa. The funding will be primarily for these operations as well as for beefing up existing overseas operations.
Ranjan Pai, MD & CEO, Manipal Education & Medical Group said that it was too early for them to comment on this as there were many thoughts. “We are in the middle of fund raising exercise and we don't want to comment on this at this point of time,” Pai said.
This move by Manipal Global Education Services follows an announcement by the promoters of the company to buy back their early private equity investors – IDFC Private Equity and Capital International -- in a $120 million deal. This deal is expected to close shortly. During 2005-06, Capital International and IDFC Private Equity had invested $70 million in Manipal Global for a 12 per cent stake. IDFC Private Equity had made a partial exit last year, and with this round, IDFC along with Capital will make a complete exit. In addition to these two investors, Manipal Global had also raised Rs 200 crore each from Premji Invests and Catamaran Ventures, owned by Infosys co-founder Narayana Murthy, who will eventually hold around 7 per cent each in the company.
The Indian operations primarily hinge on distance education through the Sikkim Manipal University in over 40 disciplines to more than 185,000 students each year, besides a host of professional and skills education, including programs for large corporates such as ICICI and testing services through MeriTrac, which is among the largest testing and assessment services provider. Manipal Global’s operating margin stands at about 30 per cent, while its debt is Rs 500 crore, which is also being refinanced with couple of global financial institutions.
In addition to these revenue streams, Manipal Global has made strategic investments in emerging companies, including U21 Global, a global online graduate school. Manipal Education has also joined hands with City & Guilds to offer a skills training programme called IndiaSkills. On its investment in TutorVista, Manipal Global recorded a blockbuster exit, when Pearson acquired the majority stake in two steps, paying about Rs 650 crore for a stake of 76 per cent in the company.
