Private Equity Reshapes the Landscape of Indian Education

Jan. 31, 2024, 3:47 p.m.

The landscape of Indian education is undergoing a profound shift as private equity (PE) firms have begun to invest in school operations. This departure from the traditional educational model, where schools were once founded by passionate educators, now sees PE standing less for 'physical education' and increasingly for 'private equity'. Recent instances include Chinese investors infusing funds into schools in Bengaluru and Hyderabad, leading to significant ownership changes. The reasons behind this trend vary from the next generation's disinterest in managing institutions to the current management's desire to navigate a complex regulatory environment.

PE partnerships, such as KKR's majority acquisition of Eurokids and Kedaara Capital's stake in Orchids International Schools, highlight the evolving economics of Indian education. Schools are reorganizing, and setting up separate entities for various functions, making them an intriguing asset class for patient equity investors. But almost every stakeholder knows that PE investors work around the top and bottom lines. And their growing role in schools has caused some degree of concern:- “The Central government needs to step in urgently. Education is a public good and must be within the reach of all. For PE firms, all that matters is the profit,” says Dr Rajendra Singh, trustee and chairman of Mumbai’s Hindi Vidya Prachar Samiti.

While private investment often prompts a focus on school administrators to improve revenue flow, concerns arise about the potential impact on fees, the stability of students’ schooling lives, and the educational ethos. Some educationists call for transparency and regulatory measures, emphasizing the need to preserve the legacy, values, and beliefs of educational institutions amid these transformations. As PE becomes a significant player in schools, the delicate balance between profit motives and educational values becomes evident.