Gray Matters Capital selling entire 81.92% stake in IFSC for $30m

Visual from ISFC website

Impact investor Gray Matters Capital (GMC) on Tuesday announced that it is selling its entire 81.92 per cent stake in Delhi-based non-banking financial company Indian School Finance Company (ISFC) to Kerala’s Manappuram Finance Ltd.

Caspian, an impact focused investor which has advised ISFC since its inception, will also exit the company by selling its 3.48 per cent stake, according to a statement.

The deal values the 100 per cent equity shares of ISFC at Rs 248.50 crore, the statement added.

Bob Pattillo, Founder, Gray Matters Capital said, “We’ve been funding loans to women in India for 17 years. Nine years ago we asked our clients how they invested their savings and they said “Education”. They took us to see their neighbourhood schools run by entrepreneurs. Since the mothers were good consumers, we believed that their kids might be, and an industry was born.”

Incubated in 2009 by GMC, ISFC fund education institutions to meet their infrastructure requirements besides financially helping affordable private schools (APS) in India. It had raised $6 million as part of Series A funding from GMC in October 2016.

ISFC has assets under management of Rs 522.59 crore as of 31 March 2018. It claims to serve over 2.6 million students through 4,000+ institutional clients. It has a country-wide footprint spanning 116 locations across 15 states through a hub and spoke model and with over 300 employees.

“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 APS segment, helped us tremendously in achieving rapid growth, and strong financial performance over the years,” Neeraj Sharma, Managing Director and CEO of ISFC said.

Atlanta-based GMC invests in for-profit education ventures with a focus on access to affordable quality education and on employability. It is the anchor investor in CBA Capital’s $20 million education sector focused fund, Education Catalyst Fund, which has invested in edtech start-ups such as Buddy4Study, Simulanis and Kopykitab.

In April this year, it launched India’s first education and skilling sector focused accelerator program – GMC Calibrator for improving user engagement on mobile edtech apps and help bridge gender gaps in education and the workplace.

Deloitte Touche Tohmatsu India LLP acted as exclusive financial advisor and Wadia Ghandy & Co. acted as legal advisor to GMC, Caspian and ISFC.

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