Private equity firm CX Partners, Asian Development Bank (ADB) and World Bank arm International Finance Corp (IFC) are reportedly set to acquire 80% stake in Indian School Finance Co Pvt Ltd (ISFC), reports Economic Times. The company is headquartered in Hyderabad and has had a decent run in picking up educational institutions for lending.
Currently, 86% equity in this company is held by two promoter groups – an American company Gray Matters Capital and a Hyderabad-based investor Caspian Advisors. While the Indian investor will exit the company completely, the American investor will still be left with a small stake. The remaining 14% of the equity is with employees and management of ISFC.
The value of this transaction is being placed at $50 million (Rs 355 crore) and it is being split into $37 million fresh capital while the remaining will be paid to the two promoter shareholders as mentioned above. Though the exact split between the three new investors is not clear, it is reported that the IFC is committing itself to $15 million in equity and another equal amount in a debt transaction.
The report, quoting sources said to be aware the transaction, says the only process left is to obtain the approval of the Reserve Bank of India. Interestingly, the same NBFC had been the target of takeover attempts in the past, once by Manappuram Finance and again by Kedaara Capital, a private equity fund. In the case of Manappuram Finance, RBI did not accord its approval and in the case of Kedaara Capital, it did not move beyond discussions.
ISFC is into lending to private schools, vocational institutes and affordable schools. It gives loans to those running coaching classes too. The funds are normally meant for creating infrastructure by these educational institutions. The NBFC has created a hub and spoke model for its presence in 15 states across the country and employs around 300 people spread across 155 locations. The total assets under management is Rs 560 crore.