Gray Matters Capital to sell entire stake in ISFC to Manappuram Finance for Rs 248.50 crore

With the acquisition, Kerala-based Manappuram Finance, a gold finance NBFC, makes its foray into a new segment of funding educational institutions.

Gray Matters Capital, an impact investor with a gender lens, focused on enterprises working to improve access to affordable quality education and employability in India, has announced it will sell its entire 81.92 percent stake in Delhi-based Non-banking Financial Company (NBFC) – Indian School Finance Company (ISFC) – to Manappuram Finance Limited. The total value of the deal is Rs 248.50 crore.

As part of the transaction, Caspian, an impact-focused investor, will also exit from ISFC, selling its 3.48 percent stake. The entire transaction values ISFC equity shares at Rs 248.50 crore.

Incubated in 2009 by Gray Matters Capital, ISFC exclusively funds education institutions to meet their infrastructure requirements, and it is the first niche financier to affordable private schools (APS) in India. It had raised $6 million as part of Series A funding from Gray Matters Capital in October 2016.

Bob Pattillo, Founder, Gray Matters Capital said, “We’ve been funding loans to women in India for the past 17 years. Nine years ago, we asked our clients how they invested their savings, and they said Education".

ISFC has assets under management (AUM) of Rs 522.59 crore as of 31 March 2018. Currently, it serves over 2.6 million students through 4,000+ institutional clients. It has presence across 116 locations across 15 states.

According to ISFC, 79 percent of its customers run affordable private schools with monthly fees under Rs 1,200 and 23 percent of borrowers are women. In its portfolio, 20 percent of all loans are made to schools in rural areas, and 2,600 loans made to teachers with low salaries.

“ISFC was able to demonstrate that affordable private schools can be a bankable and high impact asset class. With affordable private schools flourishing, the entire ecosystem of products and services to improve education outcomes has evolved. The expectation is that all these initiatives will enable inter-generational impact,” said Ravi Narasimham, Investment Director at Caspian Impact Investment Adviser.

Gray Matters Capital (GMC) is an Atlanta-based impact investor, with a mission to support "An education leading to a more purposeful life for 100 million women by 2036." In India, it invests in for-profit education ventures with a focus on access to affordable quality education, and on employability leading to a future job-ready workforce.

GMC is the anchor investor in CBA Capital’s $20 million education sector focused fund – Education Catalyst Fund, which has invested in edtech startups such as Buddy4Study, Simulanis and Kopykitab. In April this year, it launched India’s first education and skilling sector focused accelerator programme – GMC Calibrator – for improving user engagement on mobile edtech apps, and help bridge gender gaps in education and at the workplace.