Deals tend to be small in the highly regulated industry. The Indian education sector saw 11 private equity investments worth a combined $130 million in the first four months of 2011, putting it on track to surpass last year's $261 million raised from 25 deals, according to a report by Kaizen Private Equity.
Recent deals include a 1 billion rupee ($22 million)investment in staffing and vocational training firm Teamlease by Indian funds Gaja Capital and ICICI Ventures, the $2 billion private equity arm of No. 2 lender ICICI Bank.
New Silk Route, which runs a $1.3 billion fund focused on the Asian consumer sector, has made one investment in Indian education and is hoping to close its next investment in the vocational or test prep segment in the coming six months, said partner Jacob Kurian.
"We are actively interested because the opportunity is huge but the way the sector is structured now, it is more suited to venture or smaller private equity deals than bigger funds like ours," said Kurian, whose fund has a minimum deal size of $40 million. "So given the size and scale of companies, bigger deals are limited," he said.
The attraction is a roughly $85 billion education sector, more than half of which is funded privately in a country where state schooling is often so bad that most families who can afford it send their children to private school.
While just 7 percent of India's primary and secondary schools are private, they attract 40 percent of pupils, according to CLSA. Parents are happy to spend their savings to create opportunities for the children who will support them in their old age.
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