February 2019

Funds will be used for new offerings, expand management team

City-based education finance company Shiksha Financial Services India Pvt. Ltd. has raised ₹55 crore to provide financial aid to educational institutions and school children, said a top official.“We have raised successfully ₹55 crore, at a time when the fintech start-ups are finding it difficult,” said V.L. Ramakrishnan, founder director and CEO, Shiksha Financial Services India Pvt. Ltd. “The funds would be used to provide working capital to educational institutions and to parents as non-collateral loans to pay school education fees,” he said.

“Besides, we will use the funds for expanding our distribution presence to States, including Maharashtra, strengthening the management team and work on new product offerings within the education finance sector,” he added.

According to Mr. Ramakrishnan, this is the third time the fintech start-up had raised funds. Till 2017, it had raised ₹21 crore. Zephyr Peackock India Growth Fund and existing investors Aspada Investment Company and Michael & Susan Dell Foundation had invested in the second round.

Till date, Shiksha Finance had disbursed business loans aggregating ₹170 crore to 1,700 educational institutions benefitting 6.5 lakh students and education study loans to parents of 15,300 children.

“Within the next 18-24 months, our aim is to increase our offerings to 4,000 educational institutions to cover 16 lakh students and school education fees to one lakh students. Currently, we have a loan book of ₹102 crore against 10 crore some two years back,” he said.

“Shiksha Financial operates in 23 districts of Tamil Nadu, Puducherry, Karnataka, Andhra Pradesh, Telangana and Maharashtra. It is also planning to enter new territories,” said Jacob Abraham, founder-director and COO, Shiksha Financial Services.

Chennai-based Shiksha Financial Services India raised funding Rs 55 crore from Zephyr Peacock India Growth Fund and existing investors Aspada Investment Company and Michael & Susan Dell Foundation. With the current funding, Shiksha Finance is looking at expanding its distribution presence to new states, including Maharashtra, financing the company’s growth plans and strengthening the management team. 

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Chennai-based Shiksha Financial Services India Private Limited on Friday said it has raised Rs 55 crore from Zephyr Peacock India Growth Fund and existing investors Aspada Investment Company and Michael & Susan Dell Foundation.

Chennai-based Shiksha Financial Services India Private Limited on Friday said it has raised Rs 55 crore from Zephyr Peacock India Growth Fund and existing investors Aspada Investment Company and Michael & Susan Dell Foundation.

According to Founder Director and CEO VL Ramakrishnan, the funds will be used to finance the company’s growth plans and strengthen the management team. With the current fund raise, Shiksha Finance is also looking at expanding its distribution presence to new states, including Maharashtra.

The company had raised its Series A round of Rs 21 crore in 2017, and continues to work on new product offerings within the education finance sector. Speaking on the growth Shiksha Finance has achieved, VL Ramakrishnan said,

“Shiksha has cracked an innovative lending model centered around the education sector and has disbursed 1700 business loans to education institutions and 15,300 school education study loans to parents. The company is now present in 40 locations across five states with cumulative disbursement of Rs 170 crore.”

According to the company, its student loan product is designed to ensure uninterrupted education for children. The product’s perpetual design enables a child to continue education, eliminating the fear of drop-outs on account of lack of access to financial resources. The company’s credit assessment model has been developed to address the needs of customers who have income, but are not able to produce financial records like balance sheets and income tax returns.

Speaking on the investment, Pankaj Raina, Managing Director, Zephyr Peacock said,

“Shiksha is uniquely placed in the education financing ecosystem as a lender to both schools and students. Its product offerings help improve the quality of affordable private schools and help children from low-income backgrounds access quality education. Access to quality education is an aspiration for most lower and lower middle income households in India and we believe this is a multibillion dollar market.”

Kartik Srivatsa, Managing Partner, Aspada said, “We are delighted that Shiksha’s unique business model has demonstrated a sustained ability to raise both debt and equity at scale. Equity infusion in a challenging market environment is a strong reaffirmation of the fundamentals of Shiksha’s business model and the role the company plays in offering much needed capital to India’s educational institutions.”

In November of 2016, Shiksha Finance had raised $1 million (Rs 6.7 crore) from the Michael & Susan Dell Foundation in a round that also saw participation from Aspada Investment Advisors.

Vikas Verma, Director at Michael & Susan Dell Foundation (MSDF) said on the current investment,

“We are delighted to see the progress that Shiksha has been making since 2016 and are confident that the Shiskha team will continue to build on the progress that it has made till date.”

• Shiksha will use the funding to expand its presence in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka and enter Maharashtra
• Shiksha provides student loans to parents of school-going children, and school loans to educational institutions

Topics Shiksha Finance |Zephyr Peacock

Mumbai: Private equity fund Zephyr Peacock India Growth Fund has led a ₹55 crore funding round in Shiksha Finance, a Chennai-based education finance company, said a senior executive.

The round also saw participation from existing investors of the company. Shiksha finances students in classes I-X and also provides financing for working capital and capital expenditure to schools that run classes from nursery/kindergarten to Class 12.

“ ₹55 crore of growth capital has been raised from new investor Zephyr Peacock India Growth Fund and existing investors Aspada Investment Company and Michael and Susan Dell Foundation,” said Shiksha chief executive officer and director V.L. Ramakrishnan. Shiksha will use the funds to expand its presence in existing locations and foray into new locations such as Maharashtra. It is currently present in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka.

Prior to the current round, Shiksha raised a ₹21 crore Series A round from Aspada and the Michael and Susan Dell Foundation in 2017. It has also raised an additional ₹115 crore of debt so far. “Shiksha is uniquely placed in the education financing ecosystem as a lender to both schools and students. Its product offerings help improve the quality of affordable private schools and help children from low-income backgrounds access quality education,” said Pankaj Raina, managing director, Zephyr Peacock India.

Access to quality education is an aspiration for most lower and lower middle income households in India and Zephyr Peacock India believes this is a multibillion dollar market, he said. “Zephyr Peacock has been closely tracking the education finance space. Our investment in Shiksha fits well with Zephyr’s investment thesis in the education financing sector,” Raina said.

Shiksha provides student loans to parents of school-going children, and school loans to educational institutions. The average student loan is for ₹25,000 for 12 months, while the average school loan is of ₹7 lakh for a tenure of four years, said Ramakrishnan. It has a loan book of ₹102 crore, which it aims to double over the next 5-6 quarters.

For many of our customers, it is their first time borrowing from a formal financier. They usually approach private money lenders, said Ramakrishnan.

“In many cases, the interest that the customer pays for our loan is less than half of the interest paid to a private financier. In that way, Shiksha’s loan helps our customers reduce their interest burden and enhance financial inclusion in India. What is unique about our model is that credit delivery happens at the customer’s doorstep,” he added.