New Silk to invest $70m in Chaitanya edu group

The US$ 1.4 billion New Silk Route (NSR) Private Equity is close to investing Rs. 325 crore (Rs. 3.25 billion) or roughly US$ 70 million, in Hyderabad-based Sri Chaitanya Educational Group, one of the country’s largest network of private schools and junior colleges, at least two persons familiar with the development said.

This could be till date among the biggest foreign investments in India’s education sector that is beginning to see a robust deal flow. NSR is an Asia-focused PE fund spearheaded by ex-McKinsey honcho Rajat Gupta, a former global head of Citi Victor Menezes and Parag Saxena.

The fund has issued a term-sheet (a document guiding legal counsel to a final agreement) and is in the midst of due diligence. The transaction, which will see the fund picking up between 33% to 49% stake, could be clinched within the next 45 days, said one banking source who declined to be identified since talks are private.

Sri Chaitanya runs around 160 institutions, mostly in Andhra Pradesh, including 116 schools and junior collages. The 25-year-old group had mandated Ernst & Young to raise funds after spurning buyout offer from a large southern corporate house with interest in education. A senior official at New Silk Route declined to comment. “Nothing yet. We will let you know when something happens,” said YLV Sridhar, Finance Director at Chaitanya when contacted.

Source: The Times of India, November 16, 2010