US-based insurance exchange and software services firm Ebix and a London-based investor are now in front-runners list to buy debt-laden Educomp Solutions after they submitted binding offers for the company.
According to an ET report, Ebix’s offer includes upfront payments and values the company below Rs 300 crore, which is 90% less than the Rs 3,000 crore owed by Educomp to lenders.
Recently, two other potential buyers, FIITJEE and ExtraMarks, which had completed due diligence on Educomp Solutions, did not submit offers due to inadequate information on the subsidiaries of Educomp. Also, their plea for a two-week extension to evaluate the company was dismissed by the National Company Law Tribunal.
Downfall of Educomp
Founded in 1994, the company specialises in K-12 (kindergarten to Class 12) content library with 3D multimedia educational content. It has 350 pre-schools under the name Little Millennium, 45 K-12 schools and 63 test prep centres.
The company, which expanded rapidly in the past decade, ended up creating a pile of debt. In an effort to unburden itself with debt, the edtech firm is divesting to pay back its lenders.
The group of creditors includes State Bank of India, Axis Bank, ICICI Bank, International Finance Corporation(IFC) and French development finance institution Proparco.
Meanwhile, the Gurugram-based startup promoted by Shantanu Prakash, filed for bankruptcy in May last year. Surprisingly, Educomp which was listed in 2006 at Rs 125 a share, made listing gains of Rs 128.28 on the day and is currently trading at Rs 8.11.
In the 2014-17 period, Educomp had reported a loss for 11 consecutive quarters.
Educomp’s India subsidiary includes Edusmart, Educomp Learning Hour, Edu Infra and Vidya Mandir Classes, which are slated to be admitted for insolvency proceedings. A Singapore-based arm of the company is already facing liquidation.
In July 2016, it sold its entire 67% stake in Vidya Mandir Classes for $13 million as part of a debt recast deal with ICICI Bank.
Two years ago, it divested 55.41% stake in Gateforum Educational to private equity firm ASK Pravi Private Equity Opportunities Fund.
In 2013, it sold its 50% stake in pre-school chain EuroKids International to a consortium of financial investors. The same year, it also sold its stake in IndiaCan Education to its joint venture partner Pearson.
Ebix evolution in India
NASDAQ-listed Ebix, a supplier of on-demand software and e-commerce services to the insurance, financial, e-governance and healthcare industries, intends to create a financial exchange to cater to all the payment needs of its customers starting from remittance, bill payments, insurance and even travel.
The company entered the Indian market with the purchase of an 80 per cent stake in ItzCash for Rs 800 crore from Essel Group and other shareholders in May last year.
In September, Ebix acquired Paul Merchants Ltd’s International remittance business for Rs 262.77 crore. Two months later, Ebix’s Singapore arm acquired Bengaluru-based online travel company Via.com for $75 million to further expand its distribution network in South East Asia.
Besides, the company had also acquired Wall Street Finance and YouFirst Money Express in August last year.
The firm had also pledged a fund of $100 million to make more investments and acquisitions in Indian companies via ItzCash.