Gray Matters Capital Set to Sell its Stake in Indian School Finance Company (ISFC) to Manappuram Finance
During its investment in ISFC, Gray Matters Capital has positively impacted the lives of over 2.6 million Students in 2000+ Affordable Private Schools (APS) with 23% borrowers being Women
Gray Matters Capital (GMC), an impact investor with a gender lens focused on enterprises working to improve access to affordable quality education and employability in India, has today announced that it has decided to sell its entire 81.92% stake in Delhi based Non-Banking Financial Company (NBFC) - Indian School Finance Company (ISFC). The entire stake will be sold to Manappuram Finance Ltd., which is one of the leading gold finance NBFCs in India, based out of Kerala. Caspian, an impact focused investor which has advised ISFC since its inception will also exit the company, selling its 3.48% stake.
The Sellers and ISFC have entered into binding agreements with Manappuram Finance Ltd. and the deal, which values the 100% equity shares of ISFC at INR 248.50 crore, is subject to customary closing conditions and regulatory approvals.
Deloitte Touche Tohmatsu India LLP acted as exclusive financial advisor and Wadia Ghandy & Co. acted as legal advisor to Gray Matters Capital, Caspian and ISFC.
Incubated in 2009 by Gray Matters Capital, ISFC is the first company in the world to exclusively fund education institutions to meet their infrastructure requirements and the first niche financier to affordable private schools (APS) in India. It had raised $ 6 million as part of Series A funding from Gray Matters Capital in October 2016.
ISFC Loan Portfolio : Quantifying the GMC Investment Impact
ISFC has assets under management (AUM) of INR 522.59 crore as of 31 March 2018. Currently ISFC serves over 2.6 million students through 2,000+ institutional clients.
It has a country-wide footprint spanning 110 locations across 15 states through a hub and spoke model and with 348 employees.
79% of customers run affordable private schools with monthly fees under Rs.1200
23% of borrowers are women
20% of all loans made to schools in rural areas
1400 loans made to teachers with low salaries
Besides educational institutional loans for infrastructure, the loan portfolio has been diversified to loans for ecosystem players in education (book publishers, content companies, computer providers, stationery vendors, furniture providers, uniform providers etc.) and student education loans under the ‘Shishya Finance’ scheme.
Recounting the genesis of ISFC, Bob Pattillo, Founder, Gray Matters Capital said, “As we looked for opportunities beyond microfinance in India to impact lives through investment, affordable private education, made virtually invisible by its ubiquity, presented itself as a sector with unique set of opportunities. Basis our experience in microfinance, we hypothesized that with the right institutional ﬁnancial support, these schools could potentially improve the quality of their education and infrastructure and reach many more. That was what made us incubate ISFC.”
“With ISFC, Gray Matters Capital pioneered the private school ﬁnance sector in India. With our investment in ISFC, we enabled a dynamic ecosystem of borrowers and lenders in the private school sector with its focus on quality and access, underscoring our credence of being ecosystem investors,” said Ragini Bajaj Chaudhary, India CEO, Gray Matters Capital.
“ISFC was able to demonstrate that affordable private schools can be a bankable and high impact asset class. With affordable private schools flourishing, the entire ecosystem of products and services to improve education outcomes has evolved. The expectation is that all of these initiatives will enable inter-generational impact,” said Ravi Narasimham, Investment Director at Caspian Impact Investment Adviser.
Neeraj Sharma, Managing Director and CEO, Indian School Finance Company commented, “Being the pioneer in an industry often comes with its unique set of difficult challenges, the primary among them being raising capital from institutional investors / lenders. With GMC by our side, its experience in microfinance and its understanding of the Affordable Private Schools (APS) segment, helped us tremendously in achieving rapid growth, and strong ﬁnancial performance over the years.”
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