International Finance Corporation (IFC), the private-sector investment arm of the World Bank, has proposed to invest up to $30 million (around Rs 209 crore at the current exchange rate) in non-bank lender Indian School Finance Company Pvt. Ltd.
In a disclosure, IFC said the proposed funding would be split equally between equity and debt.
US-headquartered IFC said that the investment will help Indian School Finance Company provide financing to schools for expanding their facilities and improving infrastructure.
IFC is set to join impact investment firms Gray Matters Capital and Caspian, among others, in backing Hyderabad-headquartered Indian School Finance Company.
The duo had planned to exit after non-banking financial company Manappuram Finance Ltd had agreed last July to acquire an 85.39% stake in the school financier for Rs 212.20 crore (around $31 million).
Manappuram said in a stock-exchange filing at the time that the acquisition would be a key growth driver as the financier was both scalable and profitable.
However, the Reserve Bank of India had subsequently raised concerns with regard to the shareholding pattern and management changes that would take place as a result of the proposed transaction.
While Caspian and IFC did not respond to queries on the ownership status of Indian School Finance Company till the time of publication, a Gray Matters spokesperson told VCCircle that the impact investment firm was still seeking buyers for its stake in the NBFC.
US-based Gray Matters Capital had earlier said it would sell its entire 81.92% stake in Indian School Finance Company.
Indian School Finance Company
The NBFC commenced operations in 2008. According to its website, Indian School Finance Company’s objective is to assist schools and other educational institutions in building out their capacity through improvements in their infrastructure. The firm says its focus areas include affordable private schools, play schools, private schools, private degree and vocational colleges and coaching centres, among others.
Indian School Finance Company has a presence in 116 locations across 15 states in India through a hub-and-spoke model and has more than 300 employees.
The NBFC had raised its first equity funding round from Caspian Advisors and a bunch of individual investors in 2008, according to VCCEdge, the research arm of News Corp Mosaic Digital.
The following year, it received funding from Gray Matters. The US-headquartered impact investment firm brought in more capital over the years.
Gray Matters invested a total of around Rs 76 crore, including Rs 40 crore ($6 million) in the financier’s Series A round of funding in October 2016, a person involved in the transaction had said.
IFC
IFC, which actively invests in India through both equity and debt instruments, has been on a dealmaking spree in the country of late.
In May, it anchored a $222 million (around Rs 1,547.18 crore) debt funding round in Cholamandalam Investment and Finance Company Ltd.
Similarly, in April, IFC said it planned to provide Rs 900 crore ($125 million) to L&T Finance Ltd to help the non-bank lender expand its farm equipment financing portfolio.
IFC also has an active limited partner portfolio in India where it backs private equity and venture capital funds focused on India. Last month, the institution said it planned to invest $12 million in Quona Capital Management Ltd’s new venture capital fund that focuses on the financial services sector in emerging economies including India.
