Ed-tech firm Educational Initiatives raises $25 mn from Gaja Capital

Gaja Capital, a private equity firm specialising in investments in the lower end of the middle market, has invested $25 million (Rs 171 crore) in Ahmedabad-based ed-tech firm Educational Initiatives Pvt. Ltd, according to a press statement.

VCCircle was the first to report last month that Gaja Capital was in advanced talks to invest in the company, which uses machine learning and artificial intelligence tools.

“Education is central to our investment strategy and we are long-term believers in the K12 (kindergarten to 12th grade) opportunity in India," said Gopal Jain, managing partner, Gaja Capital. "It is increasingly clear that the answer to improved learning outcomes is not the Amazon or Netflix of education but a solution that works more like Google Maps. A solution that ascertains where you are, where you want to go, and gives you the optimal path and tools to get there,” added Jain.

Educational Initiatives develops and offers education assessment and learning products and services for schools in India and overseas.

Mumbai-based investment bank Equirus Capital acted as the financial adviser to Educational Initiatives for this transaction.

Educational Initiatives was launched in 2001 by three post-graduates from the Indian Institute of Management, Ahmedabad: Sridhar Rajagopalan, Sudhir Ghodke and Venkat Krishnan.

ASSET is Educational Initiatives’ flagship test, which aims to reveal the strengths and weaknesses of individual students and the entire class. The test is taken by more than 380,000 students each year in India and overseas, according to the press release. Educational Initiatives’ flagship learning product, Mindspark, is a computer-based solution used by teachers and parents to help students learn mathematics and English. Educational Initiatives has worked with more than 3,000 schools and 14 million students, said the press release.

On the funding front, Educational Initiatives raised an undisclosed amount in 2008 in its first round from Bengaluru-based Footprint Ventures, Chennai-based IFMR Trust, and Maryland, US-headquartered Novak Biddle Venture Partners, according to VCCEdge, the data intelligence platform of News Corp VCCircle.

In the same round, Ballarpur Industries chairman Gautam Thapar had also invested in his personal capacity.

On the results front, Educational Initiatives posted total income of Rs 43.7 crore for the year ended March 2017, up from Rs 41 crore a year earlier. Net profit was down at Rs 10 crore from Rs 11 crore a year before. Total income for period ended March 2015 was Rs 40 crore, up from Rs 38 crore a year earlier. Net profit was down at Rs 8.6 crore from Rs 8.9 crore a year before. Figures for results sourced from VCCEdge.

Gaja Capital Partners

Gaja Capital Partners has been an active investor in the education space, having picked up stakes in CL Educate, EuroKids International, Junior Sports and Services, SV EduSports and Educomp Solutions.

Gaja, which had marked the final close of raising money for its third fund at $240 million last year, focuses on the consumption segment, with an emphasis on education, financial services, consumer and healthcare sectors.

Recent deals in the broader education space

Earlier this month, NSPIRA Management Services Pvt. Ltd, which offers services in the education sector, had raised $75 million (around Rs 515 crore) from Morgan Stanley’s PE arm and mid-market PE firm BanyanTree Capital.

In a potential big-ticket deal, VCCircle recently reported that serial investor Suresh Kalpathi was in talks with PE firm AION Capital to buy out Hyderabad-based Varsity Education Management Pvt. Ltd, which offers operational and support services to educational institutes.

Last month, VCCircle reported that the Indian unit of British media and publishing company Pearson Plc. had exited Bengaluru school operator Cosmopolitan Educational Trust.