D E Shaw plans $200-mn education blitzkrieg

D E Shaw, a global private equity firm with $36 billion in assets, is understood to be planning around $200 million investment in the Indian education sector by taking up strategic positions in companies offering e-learning, distant learning, vocational training and the like.

The PE major is upbeat on the sector following the ministry of education's estimate that the country needs to build close too 200,000 new K-12 (kindergarten to senior secondary) schools.

According to industry sources, the infrastructure must be set up within five years to provide education for predicted growth in student numbers and also the over 100 million children who are out of school. The government has called on the private sector to help fill this demand-supply gap.

"However, one of the principal supply side constraints for private schools is the access of  educational infrastructure required for a new school and companies such as Educomp intends to target this gap," an industry source said. The spokesperson for D E Shaw could not be reached for comments.    

D E Shaw is expected to leverage one of its portfolio firms, Excelsoft, as a vehicle for acquisitions in this sector in addition to making direct PE investments. 

D E Shaw recently picked up 35 per cent stake in Mysore-based Excelsoft from UTI Ventures for $31 million.

Excelsoft provides a range of customised learner-centric systems, test and assessment systems and desktop tools. The company adopts a product licensing approach on which services and consulting add value and stickiness.

"Excelsoft has created intellectual property in the area of e-learning technologies and combines its strengths in software development, instructional design and e-learning content development to deliver e-learning solutions," an industry analyst said.

This company has been keenly focusing on the test and assessment platform which are key enablers for universities.

Industry sources indicate that D E Shaw's next significant investment in this sector is expected to be in Manipal Learning, which is rolling out extensive initiatives.

This Bangalore-based firm has campuses in Karnataka, Sikkim, Nepal and Malaysia and is stepping on the accelerator for distance learning and vocational training programmes.

This company had earlier raised $70 million from Capital International and IDFC Private Equity during the second half of 2006.

Upbeat

The ministry of education estimated that the country needs to build close too 200,000 new K-12 (kindergarten to senior secondary) schools

D E Shaw is expected to leverage one of its portfolio firms, Excelsoft, as a vehicle for acquisitions in the education sector in addition to making direct PE investments