IIT preparation institute Resonance Eduventures to tap bourses

2014 may have been a lacklustre year for IPOs with barely Rs 1200 crores mopped up by five companies, but the dismal statistics have not deterred niche players to hit the primary markets in the new year. Kota, Rajathan based test preparation and coaching institute Resonance Eduventures which has 28 pan-India study centres for IIT and medical entrance exams is planning an initial public offering to raise around Rs 500 crores, two sources familiar with the development told ET NOW.

“The company's listed peers have done well in recent times and it's IPO plans are currently at a preliminary stage. The offering will also facilitate an exit for the company's private equity investors," said one of the two sources cited above.

CLSA Capital Partners, the private equity arm of the brokerage had invested $22 mn or Rs 140 crores for a minority stake in Resonance Eduventures in 2011. The arm has approximately $ 2.6 billion in funds under management and eight offices across Asia, including Hong Kong, Singapore and Tokyo.

The second private equity investor is Milestone Religare Investment Advisors which had invested Rs 50-60 crs in Resonance Eduventures in 2010. Three years later, Quadria Capital, an Asia-focused healthcare fund acquired Milestone Religare Investment Advisors.

“There should be enhanced private equity activity in the education sector in 2015 on the back of vibrant public markets and expectations of good exits. But this activity is likely to be more in the unregulated sector such as training institutes than the regulated K12 sector due to ease in structuring,” says Ruchir Sinha, Co-Head, Private Equity and M&A at law firm Nishith Desai Associates.

“The coaching and test preparation business is a booming segment and will continue to grow significantly in the months to come. There is a need for more such listed players in this space and any player with a solid foundation and looking to tap the bourses will have an early-mover advantage,” says Prithvi Haldea, founder, Prime Database.

Resonance trains students for competitive entrance exams like IIT-JEE, AIEEE, AIPMT through classroom contact programmes, distance learning programmes and e-learning programmes.

Resonance Eduventures, CLSA Capital Partners and Quadria Capital declined to comment in response to email queries from ET NOW.