Pearson takes control of TutorVista

UK Publishing Group Hikes Stake In Desi Education Co To 76% For . 577 Cr

TIMES NEWS NETWORK

Bangalore: TutorVista, an integrated education services company led by K Ganesh and Meena Ganesh, has sold a 59% stake to to UK-based publishing and media group Pearson for Rs 577 crore.

This transaction would give Pearson a total controlling stake of 76% in the company, making it the largest deal in the Indian education sector. Pearson already had a 17.2% stake in the company acquired in June 2009.

The development was first reported by The Times of India on Monday. The deal values TutorVista at $213 million (Rs 960 crore). TutorVista carried pre-money valuation of $4 million when pedigree Valley investor Sequoia Capital made the first investment in April, 2006. Serial entrepreneur Ganesh’s third blockbuster exit from a startup enterprise would make a clutch of financial investors in TutorVista happy as well.

This means Sequoia Capital, which invested $5 million in two tranches for a 16% stake, will take home around $35 million—almost seven times its investment—for a four year-old startup. Other investors—including Lightspeed Ventures and Manipal Education and Medical Group, which held 10% and 11% respectively—also walk away with four to five times return for their investments in the last three years.

The acquisition will bolster Pearson’s tutoring business as TutorVista provides English language coaching courses for university entrance exams and out-ofclass tuition to K-12 school children for SAT (scolastic aptitude/assessment test), ACT (American College Testing), AP and other exams. It also provides a full suite of services to K-12 schools anduses VOIP to connect instructors in India with school and college students in North America. It also reaches 3,300 classrooms by supplying digital content and technology platforms to private and government schools in India.

Commenting on the deal, Marjorie Scardino, Pearson’s chief executive, said: “TutorVista is an innovative and effective education company that we have worked with and respected for several years. This acquisition signals our excitement about the vitality of India’s education sector.”

The company has 800 employees and a roster of 2,000 tutors. It provides coaching assistance to 10,000 students every month across a network of 60 centres in South India. Its different streams of operation include digital learning content, brick-nmortar tutorial centres and formal schools. The focus is on providing quality education to students in the US and the UK through voice-overinternet-protocol services. TutorVista hires teachers in India to teach students in these locations.

Ganesh said he had started TutorVista to provide affordable education services and content globally. “Together with Pearson, we can make this happen even faster and help millions of students achieve their educational goals,” he said.

Ganesh is said to have first thought of the idea of online tutoring when he found parents in the US and the UK criticize the education system. He had earlier founded a company called IT&T, which specialized in integrating and maintaining computer systems, and later, with Meena, founded one of India’s first BPOs, CustomerAsset, which they later sold to ICICI and is now known as FirstSource.

The Indian government invests $40 billion each year or 3% of GDP in education, while consumers spend more than $40 billion on private educational institutions and services. The US market accounts for 65% of Pearson's revenues from education.