Industry
KKR's roll call for EuroSchool chain tempts Carlyle, Partners, EQT, CPPIB
Summary
- Investors conduct due diligence for Lighthouse Learning, which operates EuroSchool, Billabong, Centrepoint, Kangaroo Kids and Heritage Xperiential. A deal is likely at $700-900 million.
Private equity firms Carlyle, EQT and Partners Group and pension fund Canada Pension Plan Investment Board (CPPIB) are conducting due diligence for a full buyout of EuroSchool chain operator Lighthouse Learning from KKR, three people aware of the matter said.
Lighthouse may change hands at a valuation of $700-900 million, the people said on condition of anonymity. KKR had acquired Lighthouse in 2019 from investors led by Indian private equity firm Gaja Capital for around ₹1,400 crore, and infused more funds to acquire assets. The private equity firm has hired JP Morgan and Avendus to find buyers for Lighthouse.
The 100% stake sale in Lighthouse, that was formerly called EuroKids International Group, assumes significance given that schooling and pre-schooling are perceived as regulated sectors, and any foreign investor will have to get comfort before going ahead with the investment, the three people said.
Due diligence on
“Currently, these funds are carrying out due diligence and bids are likely to be in soon," the second person added.
Alpha Asia Holdings II Pte Ltd, an investment arm of KKR, holds 94.53% in Lighthouse, while CEO Prajodh Rajan holds the balance 5.47%, a Crisil report in February 2024 said.
Queries emailed to spokespersons of KKR and CPPIB remained unanswered, while spokespersons for EQT, Carlyle, Partners Group and CPPIB declined to comment.
Also read | Lighthouse Learning partners with Heritage Xperiential Schools to expand Network
Also read | KKR-backed EuroKids Group unveils its new identity, 'Lighthouse Learning'
Also read | KKR acquires stake in Gaja-backed EuroKids
“It is a very lucrative deal and the headroom for growth is very high. This is of high interest for PE investors," the third person said.
Under the KKR fold, Lighthouse has entered new cities, operating in Bengaluru, Mumbai, Hyderabad, Pune and NCR. It offers schooling under several education boards including CBSE, ICSE, IGCSE and IB.
"Running schools and colleges in India is an extremely profitable business - for any industry, just about anywhere in the world. If you've built a good brand and have over five years of consistent track record, it's a great play for a predictable outcome for late-stage institutional money," said Kashyap Chanchani, managing partner, The Rainmaker Group, a homegrown investment bank.
Ready to rise
The Lighthouse operates 1,350 pre-schools and schools, some of which are owned and others franchised. According to Crisil data, it had ₹688 crore revenue in FY23. It clocked over ₹550 crore revenue in the first two quarters of FY24, which was estimated to rise to ₹1,000-1,200 crore by the end of the fiscal year, Crisil said.
Founded in 1997, the Lighthouse group operates in the pre-primary and K-12 segments in the premium and semi-premium segments. With its acquisition of Heritage group of schools last year, it owns seven core brands: EuroKids, Kangaroo Kids and Mother’s Pet in the pre-school segment, and EuroSchool, Billabong High, Centre Point and Heritage Xperiential in the K-12 segment.
India's education system is one of the largest in the world with more than 1.46 million schools and 230 million students participating in modern K-12 education, according to a report by Invest India. In 2020, the sector was estimated to be worth $117 billion, and is expected to reach $313 billion by FY30. With 25 million children born every year, India’s pre-school market is expected to grow by $7.35 billion by 2028, with a compounded annual growth rate of 11.2% during 2023-2028. The number of private schools in the country has increased from 325,760 in 2018-19 to 335,844 in 2021-22.
