HDFC To Invest In Kaizen PE Fund

February 22, 2011

BY SIBI SATHYAN; VCCircle
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Signalling its growing interest in the education space, India's leading home mortgage lender HDFC is making an investment in Kaizen Private Equity, the country's first education-focussed PE fund. This comes close on the heels of HDFC investing Rs 50 crore in Indus World Schools, the formal education venture of Career Launcher.
HDFC will make the investment, whose size was undisclosed, through its wholly owned subsidiary, HDFC Holdings Ltd.
Sandeep Aneja, founder and managing director of Kaizen PE, said the HDFC investment in the fund will help it complete its $100 million fund-raising exercise. He, however, declined to divulge the size citing contractual obligations.
Following the investment by HDFC, Kaizen would now need about 50% more to close India’s first education-focussed fund entirely, he told VCCircle. Kaizen is in the process of raising a $100-million fund and has achieved its first close in December 2010. It has used the proceeds to make its first investment in an undisclosed company, a report in Business Standard said, quoting a press release.
Kaizen has, recently, raised commitment for its debut fund from International Financial Corporation (IFC), the private investment arm of World Bank.
Kaizen's fund expects to raise over 50% of the corpus from institutional investors. The PE fund will look at providing funding to education companies in their growth stage and will also focus on operational improvements in its portfolio companies. The fund would look at typically investing in the range of $5 million to $15 million, according to its website.
Thanks to its non-cyclical nature and huge demand across the KG to PG spectrum, education is one redhot sector if deal data is a pointer. The sector has seen investments of $190 million across 23 deals in 2010, according to VCCEdge, compared to 10 deals worth $128 million in 2009. Beginning of 2011 has already seen several large-ticket deals such as Dubai-based QInvest's deal with FIITJEE and Pearson's strategic acquisition of TutorVista.

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