Franklin Templeton agrees first Indian private equity deal

An INR500m investment in exam preparation company Career Point marks the firm's first deal from its INR6.3bn fund closed in October.

Franklin Templeton Asset Management has invested INR500 million ($10.3 million; €7.3 million) for an undisclosed stake in Career Point Infosystems, an examination preparation company in India.

This is the first deal from the Franklin Templeton Private Equity Strategy fund, which closed on INR6.3 billion in October 2008. The fund is advised by Darby Asia Investors (India), the private equity affiliate of Franklin Templeton, which already invests in India through Darby Asia Mezzanine Fund II.

Franklin Templeton Private Equity Strategy, raised from Indian high net worth individuals, invests in high-growth, mid-sized unlisted companies in the infrastructure, manufacturing, consumer goods and related sectors.

Based in the state of Rajasthan, Career Point provides training and preparation for competitive examinations. The company provides coaching for admission to the Indian Institutes of Technology and other colleges and universities.

Career Point aims to provide learning solutions across the education spectrum and is now entering the Kindergarten to Grade-12 and higher education sectors, as well. Franklin Templeton’s investment will be used to expand the company’s operations and business lines.

“The positive characteristics of the education industry – acyclic nature, high revenue predictability and negative working capital,” coupled with the company’s experience and successful track record, make this an

The large, fast growing and predominantly young population along with a rising demand for skilled workforce to sustain economic growth, has resulted in increased demand for quality education in India.

Deepa Sankaran

attractive investment with strong earnings growth potential, Deepa Sankaran, principal at Darby Asia Investors (India), told PEO.

“The large, fast growing and predominantly young population along with a rising demand for skilled workforce to sustain economic growth, has resulted in increased demand for quality education in India,” she said.

Within this sector, one of the key segments is the test preparation market that tutors students for careers in engineering, medicine, civil services and business management, Sankaran added.

This is the second investment in an Indian education company this month. Two weeks ago, Matrix India Partners, an India-focused venture and growth capital firm, invested INR1 billion for an undisclosed stake in FIITJEE, another company providing training for competitive examinations.

In May, South and Southeast Asia-focused Navis Capital Partners invested $30 million for a stake of between 55 percent and 80 percent in Edutech, an Indian education company offering tertiary, post-graduate and part-time executive programmes in fields such as finance, healthcare, hotel management and hospitality.

Franklin Templeton’s affiliate Darby has made three investments in India from Darby Asia Mezzanine Fund II. These include include Amalgamated Bean Coffee Trading Company, a coffee conglomerate involved in coffee procurement, processing and retailing; Bhoruka Power, a company engaged in the construction of wind power and small hydroelectric projects; and Escorts Construction Equipment, a manufacturer of heavy construction and material handling equipment.