Rs 577-crore deal shows growing interest abroad in investment potential of Indian education.
In what can be termed as the largest acquisition deal in the Indian educational sector, UK-based media and publishing firm Pearson today picked an additional 59 per cent stake in online tutorial services provider TutorVista for Rs 577 crore. Based on the deal, the company has been valued at Rs 960 crore.
Pearson is the owner of the renowned book publisher Penguin, besides the UK-based business daily The Financial Times. The company's Indian arm, Pearson India, which had earlier acquired 17 per cent stake in TutorVista, will now own 76 per cent in the firm taking a majority control. With this fresh infusion, Pearson’s total equity investment in Tutorvista now stands at Rs 631 crore.
John Makinson, chairman, Pearson India said, "We have picked up additional 59 per cent stake in TutorVista for Rs 577 crore that will take our total holding to 76 per cent.”
"We would look for opportunities in higher education like providing services to universities, teachers training and English language training."
Over the next month, Pearson is looking at buying out another four per cent stake from small investors for about Rs 38-39 crore.
| TOP FIVE DEALS IN EDUCATION | |||
| Year | Company | Investor | Deal value (Rs cr) |
| 2011 | TutorVista | Pearson | 577 |
| 2010 | Sri Chaitanya | New Silk Route Educational Group | 325 |
| 2010 | Everonn Education | Nikhil SKIL Infrastructure | 208 |
| 2008 | Excelsoft | DE Shaw, Arohi Investment | 150 |
| 2006-’08 | TutorVista | Sequoia Capital, Lightspeed | 94 |
TutorVista is a leading online tutoring company in the world, set up by promoter Krishnan Ganesh in 2005 with 2,000 tutors across India and teaching US students through the online platform. The company is also into K-12 space and supplies digital content and technology platforms to various schools. It has a growing presence in test preparation and tutorial segment.
In India, Pearson Education specialises in publication of academic and reference books in the fields of computer science, engineering, business and management, trade, higher education and competitive examination.
In June 2009, Pearson had acquired a 50 per cent stake in education company Educomp’s existing vocational training business for $17.5 million (around Rs 85 crore). The group also owns Edexcel, which provides academic and vocational qualifications, and works with over 300 schools in the subcontinent. Pearson Vue, the other group company conducts professional testing and assessment in the field of education.
Analysts say the deal marks the growing interest both among PE funds as well as companies who see a large potential for growth in the education sector. PE funds, which include Matrix Partners, New Silk Route and DE Shaw, have already made some small to mid-sized investments in the booming area.
The TutorVista acquisition follows recent investments by Pearson in both acquisitions and organic growth opportunities in China, Brazil, Southern Africa and Nigeria. The group recently invested $ 400 million in Brazil and completed two acquisitions in China, Makinson informed.
Pearson expects the acquisition to enhance Pearson’s adjusted earnings per share and return on invested capital in 2012, its first full year.
