Education is considered the most crucial and the vital key for modernisation and development. The importance of education can be evaluated from the fact that every advanced society and culture is promoting universalisation of education as a parameter for long term economic development. There is a huge demand for advancement and modernisation of education system in India, as the country is estimated to have an excess of 47 million resources in the working age group by 2020. As per the prediction of the consumption trends urban India is investing 9% of earning on education whereas the rural consumer is limited to 6%.
Ecosystem of Education in India
Of late education sector in India has witnessed a chain of changes, resulting in a significant rise in the market share of the education sector. With economic development and evolving technology, Indian education sector has reasons to celebrate. The Government of India has also initiated many plans to attract investments from non-resident Indians for the development of education infrastructure.
Key Drivers of Indian Education Sector
• Demographic Fact
As per Census 2011, there are 35.3% Indian population is below the age bracket of 14.
• Catapulting Awareness
Increasing awareness towards education has become an essential cause for career growth.
Growing job opportunities and attractive salaries offered is making investment in Indian education a wise decision.
• Skilled Workforce Demand
Demand for an skilled workforce is at all time high in services sector
• Technology Penetration
Increase in evolution of technology leads to virtual learning and advance education delivery
• New Employment Opportunities
Fresh employment avenues like KPO, LPO, retail, animation, aviation, corporate etc. demands highly skilled manpower
Investment Opportunities Leads to Growing Investment Interest
Nowadays education sector in India is one of the hottest sector attracting big players to invest in this industry. The entire education system is reeling under a renovation process, as per PricewaterhouseCoopers (PwC).
As per a study by DTZ, the Indian higher education segment requires 5,550 million sq. ft of additional educational space to address the 30% Gross Enrolment Ratio (GER) in higher education target by Government of India by 2020.
Entry of foreign universities has intensified the competition and will also provide a global platform to the Indian students to acquire quality learning.
Due to tight finance the share of government schools in India appears to be declining, which leads to growing interest amongst private sector, public sector and corporate entities to enter the K-12 education space, given the huge target market and potential profit.
Robust Growth
The shooting income brackets, rapid urbanisation, and increasing awareness about the significance of quality education have led to the robust growth of the Indian educational industry and business opportunities for private equity firms.
Private sectors are the leading players in setting up educational institutes, especially in the K-12 and higher education verticals, a higher degree of specialisation in course content equipped with increasing variety of courses offered and higher fees is expected to accelerate the growth in the higher education segment.
Investments Stats
In the year 2007 MT Educare, an education collaboration offering classroom tutorial and coaching for CAT tests, received equity funds of $ 40 million.
In yet another case Excelsoft, a Mysore based company delivering products and services in the e-learning arena, received UTI venture by selling 35.5% stake of the company in the year 2002 with a whopping return of 50x return in the year 2008 and then sold the stake to DE Shaw same year.
This shows the successful investment by big players and the opportunities that still exists.
Synopsis
As per the estimation the unprecedented growth in preschool segment is trigger by increased interest of organized and big players. These players have ample resources and are entering the organised space to establish their brands and the existing ones are utilising the name of established brands via franchisee model, driving faster returns in the form of royalty!