Friday, October 2, 2009

Now, coaching classes will be a field for M&As

Now, coaching classes will be a field for M&As
Coaching Class St is priming for some M&A action.
Mahesh Tutorials, which was perhaps the first coaching class to get private equity funding in India, is working on an acquisition strategy to expand across the country.It's perhaps a harbinger of what lies in store in the space as intensifying competition among students leads to a relentless boom in the extra-curricular coaching industry.Mumbai-based entity gave itself a corporate structure --- it was re-christened MT Educare Pvt Ltd in 2006 -- after the funding.A leading player in the preparatory or tutorial business in India, MT has earmarked $6 million for buyouts in the private coaching space across the country.Mahesh Shetty, director of MT Educare, said the company has brought on board a chief strategist, Chhaya Shastri, who has worked in real estate, media and healthcare. She will advise on potential buyouts.
"A few players have been identified across different verticals where we are still not present. Negotiations are currently at various stages, so it is too early to get into specifics now," said Shetty. An IIT tutor that MT Educare has been eyeing for quite sometime now may be the first one to be bought.Online coaching is another space where the MT is assessing things.The company currently operates in four verticals --- training solutions, commerce, science, schools and pre-school.Being largely a fragmented business, there are no official numbers on the overall size of the private coaching business in the country.
The market size in Mumbai alone is estimated to be around Rs 1,000 crore, growing at 10% annually. MT needs the inorganic growth to touch a topline of Rs 75 crore topline this fiscal, from Rs 43 crore last fiscal.In August 2007, the Mauritius-based, India-focussed fund Helix Investments put $12 million for a 30% stake in MT. The company will fund acquisitions from some of this money."Approximately 50% of the money raised has already been deployed towards expansion besides putting the technology and infrastructure in place. The balance will now be spent on merging and acquiring players in the new verticals we want to have our presence in," pointed Shetty.
The gameplan is to list the company down the road, when the stockmarket turns favourable.