Gaja Capital puts preschool chain EuroKids on the block

MUMBAI: Home-grown private equity fund Gaja Capital has put its preschool chains EuroKids, Kangaroo Kids and Billabong High on the block, valuing the chains at $300 million ( Rs 2,000 crore), according to two people aware of the development. Gaja Capital and Swiss fund Partners Group together hold about 75% stake in EuroKids, which has a network of 1,000 schools across the country. Avendus Capital has been hired to run the sale process.

Though the PE investors will make a complete exit from its 5-year old investment, the promoters will stay with the company as minority shareholders, said the first person cited above. Founded by Prajodh Rajan and Vikas Phadnis in 2001, EuroKids Group manages its own pre-schools and schools and also operates through the franchise model across India. The group clocked a revenue of Rs 350 crore in FY18.

Gaja Capital which acquired 50% stake in EuroKids in 2013, along with its Swiss investor Partners Group, increased its stake in five years to about 75%. The 11-year old EuroKids had acquired pre-school chain Kangaroo Kids and Billabong High International Schools last year.

Kangaroo Kids has a network of 79 pre-schools and Billabong High Schools has a network of 21schools. Spokespersons at Gaja Capital, Partners Group, Avendus Capital declined to comment while a mail sent to Prajodh Rajan, co-founder, Euro-Kids did not elicit any response till the time of going to press. EuroKids Group consists of Euro-Kids International, EuroSchool Properties & Infrastructure, EuroSchool International, EuroSchool Foundation, EuroSchool Education Trust, Kangaroo Kids Education and Lina Ashar Foundation.

The occupancy of EuroKids stood at 85% for academic year 2018. There are over 90,000 students enrolled across campuses in the current year against 84,126 in academic year 2017. EuroKids has a presence in 360 towns in India, Nepal and Bangladesh, while EuroSchool runs a chain of 10 K-12 schools across six cities in India. Billabong High has its presence in Qatar, Dubai, Maldives and Saudi Arabia.

The major players in the organised pre-school market include Amelio, EuroKids, Kangaroo Kids, Kidzee, Little Elly, Lily Candies, Little Einsteins, Modern Montessori International, SHEMROCK, Smartkidz, Sunshine Preschool & Daycare and TreeHouse.

Though there is competition from local schools that have established positions supported by extensive tenures, organised players such as the EuroKids group could benefit from brand recall and standardised curricula, which enables quality education, according to a recent report by CRISIL.

The K-12 school segment is exposed to stringent regulations of the Government of India including the Right to Education Act. Besides, changes in government regulations related to fees could impact revenue or profitability in this segment, the report added.

Education is one among the core investment sectors for Gaja Capital. In July, it had invested $25 million (about `172 crore) in Bengaluru-based educational technology company Educational Initiatives. In education, Gaja Capital invested in CL Educate and SportzVillage — provider of sports management to schools and corporates.

Founded in 2004, Gaja Capital manages assets of about $500 million across its three funds and has a major focus on the consumption segment. The PE firm, which raised its third fund Gaja Capital III at $240 million in 2016, invested in Jiggs Kalra owned Massive Restaurants, John Distilleries, RBL Bank, broking network Bonanza, TeamLease, Bakers Circle, Carnation, Kinara NBFC, Suryoday and Avendus.