India's first education-focused private equity (PE) fund, Kaizen Management Advisors, will close a $150-200 million fund by the middle of next year. The fund is looking at investing in two education institutions by the end of this year. Sandeep AnejaKaizen was set up in mid-2009 and has a 10-member team in India. At present, it is managing capital raised from domestic institutions and high net worth investors. The education sector, virtual and offline, has been attracting investments from strategic and financial investors. Education is an $80-billion (INR 3,84,000 crore) market in India split between the public sector ($30 billion or INR 1,44,000 crore) and the private sector ($50 billion or INR 2,40,000 crore).
Kaizen will invest in core education, including schools and colleges, teacher training schools, finishing schools, publication companies, and courseware and technology companies. It expects a grosss internal rate of return of 30 per cent and has already invested in vocational space. Aneja refused to tell the name of this company. The biggest hurdle in the sector was regulation, said Aneja. 'While India needs quality private education, there are regulations which prohibit the ability of investors to provide all that is needed to create such an environment. High quality need not be expensive,' said Aneja. Kaizen plans to stay invested in the ventures for at least five years. Exit options will include creating companies that can be sold as standalone companies, secondary sale to larger funds and selling stake via an initial public offering.