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PE-backed MT Educare, Nspira Management in talks for potential M&A

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Mumbai-based education services firm MT Educare Ltd said on Monday it has agreed to evaluate a potential merger or acquisition with NSPIRA Management Services Pvt. Ltd.

The discussion between the two companies is at a preliminary stage, MT Educare said in a stock market disclosure. The proposed arrangement is subject to due diligence, regulatory and third-party approvals, it added.

NSPIRA, a Hyderabad-based management services provider, started operations in 2013. It raised its first external investment worth Rs 400 crore (nearly $60 million) in January last year.

Mid-market private equity firm Olympus Capital Asia Credit and CX Partners’ mezzanine fund led the funding round but the company did not disclose the names of other investors.

NSPIRA focuses mainly on educational institutions. It offers staffing, training, IT infrastructure, and sales and marketing services. It also manages catering and transport facilities, infrastructure solutions and administrative functions. The company has about 11,000 employees and has presence in eight states.

It had net sales of Rs 486.63 crore in the fiscal year ended 31 March 2016 when it swung to a net profit of Rs 35.69 crore, according to VCCEdge, the data research platform of News Corp VCCircle.

MT Educare, which was listed on the stock exchanges in April 2012, caters to students from class IX to those appearing for engineering and medical entrance exams, chartered accountancy and business administration.

MT Educare has also received private equity investments in the past and still has some PE firms as shareholders. Helix Investment was its earliest investor but has now fully exited.

In 2014, Abu Dhabi Investment Authority, the sovereign wealth fund of the emirate of Abu Dhabi, picked up a 1% stake in the firm. MT Educare also counts BanyanTree Growth Capital and financial services firm Avendus' public markets-focused PE fund as shareholders.

Its consolidated revenue grew 26% to Rs 287.08 crore in the fiscal year ended on 31 March 2016, according to its annual report. Its basic net profit from continuing operations rose to Rs 29.22 crore from Rs 27.85 crore the previous year.

MT Educare had 161 coaching locations in 13 states and union territories, as per its latest investor presentation.

While there has been some private equity activity in the education services sector, consolidation activity has been muted. In December last year, Zee Learn Ltd, the education arm of media baron Subhash Chandra’s Essel Group, scrapped a planned merger with pre-school chain Tree House Education & Accessories Ltd.

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MT Educare Ltd. (formerly known as Mahesh Tutorials Pvt. Ltd.) is engaged in providing education services. The firm offers commerce streams for XI and XII standard along with degree course like the bachelor in commerce; coaching for science stream XI and XII standard students in the field of medical and engineering for entrance exams; tutorials for chartered accountancy; aptitude test preparation and vocational skills training. It is also involved in teaching IX, X, XI, and XII standard student for the courses like science, commerce and professional studies. The company was founded in 1988 is based in Mumbai, Maharashtra.

(OCA Credit)

Olympus Capital Asia Credit is a debt fund managed by Olympus Capital Holdings Asia India Advisors Pvt. Ltd. It provides debt capital in the form of senior, subordinated and junior debt with two to three year of maturities for acquisition and special situations to the companies operating in Asia. It typically invests between $20 to $100 million in its portfolio companies.

BanyanTree Growth Capital is a private equity fund managed by Banyan Tree Capital Advisors. It provides finance to middle-market companies operating in India. The firm seeks to invest in manufacturing and information technology sectors in India. The size of the fund is $100 million.

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