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October 19, 2009

K-12 spells big bucks

As part of its Cover Story on Education, Business Today has an article on how private ventures are now increasingly targeting the K-12 segment.
Six months ago, Manipal K-12 broke new ground by taking over Sharada School, Mysore. “We offer two choices to managements of schools that fit our business model. They can either pay us to manage their schools professionally or transfer management responsibilities,” says (CEO Meena Ganesh). The firm has also taken over four schools in Nepal recently. She plans to manage 100 K-12 schools and set up six International schools in the next five years.

...The K-12 (Kindergarten to Class 12) is estimated to be worth half the $42-billion (Rs 2,01,600 crore) private education market in India and growing fast enough to double in a decade. Analysts expect the share of average household spend on education to increase from the present seven per cent to nine per cent by 2018. Technopak, a consulting firm, sees enrollments in K-12 growing to 351 million, requiring an additional 34 million seats by 2018. This equals Rs 3,91,000 crore at Rs 1.15 lakh a seat. Brokerage firm IDFC-SSKI Securities is more bullish: it expects private spending on education to grow by 14 per cent, creating a $80 billion (Rs 3,84,000 crore) market by 2012.

With such numbers in the air, the K-12 space has attracted big names like Educomp, IMS Learning Resources, Career Launcher and Shamrock. Like retail chains on an expansion spree, they have even set targets for buying out schools or building new ones.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in