Overview

There is large and growing demand for high-quality K-12 education. Growing disposable income and high aspirational values of quality education has resulted in increase in demand from Indian middle and upper-middle classfor mid-market (€760 –€2500) private education.
India has the largest number of schools (over 1.5 million) and school-goers(over 260 million):

• 26.6% (male 194 million and female 174 million) is in the age group of 0-14 years
• 17.9% (male 131 million and female 117 million) is in the age group of 15-24 (Source: British Council report- The changing school system in India, 2019)

Gross enrolment ratio in Secondary school segment was approximately 79.3% (2017) and the same was around 51.3% (2017) for Higher secondary schoolsegment There is an additional requirement of 200,000 schools. (Source: IBEF report: Education and Training Oct’19)

Education is perceived by students/parents as an investment with high returns over a long period of time, and prices are linked to high end jobs, salaries of which typically grow at a premium to inflation. In contrast, the largest cost drivers in education typically grow in line with inflation. This difference leads to healthy margins in mid-price/premium segment schools. In India 6-10% y-o-y growth is school is sustainable.

Long-term revenue can be forecasted based on average time a student spends in the organisation. A higher per student realisation reduces income uncertainty. In K-12 school segment revenue can be project at single point of time i.e. at the time of enrolment.

The main barriers that exist are high capital requirements, brand name in driving viability for education service providers, and government regulations. High upfront capex requirement and 3-4 years of gestation period prevents market from overcrowding.

Our education programs require that fees be paid in advance (quarterly), providing operators with liquidity to invest with reduced risk. This “negative working capital” makes education more operationally and financially efficient than other sectors.