With the education system in India adopting increasingly advanced teaching technologies, interactive classroom teaching and web-based learning are seeing huge growth potential, not only across the metros but also in Tier II and III cities. Encouraged by government initiatives to improve IT infrastructure and training across public schools, private equity players are sensing potential in the nascent $200-million information and communication technology (ICT) market, within the education sector.
In June, Fidelity Growth Partners India (FGPI) invested $15 million in Classteacher Learning Systems, a Delhi-based firm. The company offers digital education content with about 85,000 teaching modules mapped to multiple education boards. The funds raised are meant to fuel the company?s growth across the country and for investments into next generation personalised learning systems.
The ICT market in India is expected to grow 10 times by 2015 and exhibit a growth rate close to 65% CAGR in the years to come, according to Kaizen Education Report 2010. Kaizen Private Equity is one of India?s PE funds that focuses on the education sector.
Classteacher Learning Systems CEO Rohit Pande says, ?One has seen tremendous growth in the last two years in the market across both large and small towns. This is just the tip of the iceberg as the education community is just getting exposed to the power of digital tools.?
?Apart from the market for interactive classroom teaching, we see greater than 100% growth in the market for assessments as well as web-based learning,? he adds.
Industry observers say there has been a lot of interest in the last couple of years among the investor community with the trend towards larger deals as the sector has matured further. Pande feels the sector is attracting funds because a new industry is getting defined. There are many niches available for profitable growth, with a lot of room for consolidation in the years to come.
Few months ago, Educomp Solutions, one of the country?s leading education companies, picked up a majority stake in test preparation company Gateforum Educational Services. Gateforum is known for providing preparatory tools for the Graduate Aptitude Test in Engineering (GATE). The education company has a reach of over 26,000 schools and 15 million learners and educators across the world. In the last four years, it has invested over R92 crore, creating scale through the acquisition of the platform created by Vidya Mandir Classes and other such investments in the digital space.
Pearson, the British media and publishing company, which acquired a controlling stake of 76% in online tutoring company TutorVista for R577 crore, has major expansion plans for the digital education space. ?We have an e-book library solution called Think Tank that is being already sold in India. Our books are already available on some digital subscription-based services like Safaribooksonline. We plan to expand our reach to consumers through more digital distributors and resellers,? says K Srinivas, AVP and publisher-higher education, professional and ELT, Pearson Education.
Bangalore-based TutorVista, which is currently known as Pearson Education Service, was founded in 2005 by serial entrepreneur Krishnan Ganesh. The company functions in four main segments of online tutoring ? K-12 schools, technology and test preparation and tuition. TutorVista was backed by venture capital investors including Lightspeed Venture Partners, Silicon Valley Bank and Sequoia Capital. According to analysts, this year is expected to see more investments coming into the digital education space with increased government allocation and sourcing of IT infrastructure and training by public-private partnerships.
According to the Kaizen Report, the 11th Five-Year Plan has allocated R72,100 crore for ICT and vocational training, of which R41,100 crore has been earmarked for setting up ICT labs for computer-aided learning and Edusat Centers for distance learning programmes. In March, Educomp?s ICT division Edureach bagged two multimedia content development projects for schools from the governments of Gujarat and Assam. ?Given the massive enrollment goals of the government, particularly in higher education, and the need for improvement and standardisation of the quality of curriculum delivered in schools, digital education will have a critical role to play. We expect significant growth in the market for both standard curriculum as well as innovative services, including coaching and tuition,? says Dhiraj Mathur, executive director and leader, National Education Practice, PwC India.
?At the higher education level, delivery through the distance mode is likely to be the key driver as Ignou has very ambitious plans of expanding its network,? adds Mathur. The ICT market in India is largely fragmented and there is a clear dominance of unorganised players, while the organised segment forms roughly 2% of the total market with host of regional players. The major players in the organised sector include Educomp Solutions, Pearson Education Service, formerly known as TutorVista, NIIT, Everonn Systems and CompuCom. The success of digital learning in India would depend on hardware costs, accessibility and development costs for content, experts say.