Shiksha Financial to kickstart USD 20m Series C round in 4Q20 – founder – Mergermarket
Shiksha Financial Services, the Chennai, India-based student and educational institutions nancier, will initiate its Series C round of about USD 20m in the last quarter of FY20 ending March, Founder Director and CEO VL Ramakrishnan said.
It will mandate an advisor closer to the timeline, he said, adding that the company prefers investors that are education-centric.
Funds raised will be used predominantly for lending. A part of the proceeds will also be used to expand geographically to more states in the country and also to make its tech processes more seamless, the CEO said.
Shiksha’s promoters are Ramakrishnan, who previously co-founded Suryoday Micro Finance, and Jacob Abraham. Its other backers are Zephyr Peacock, which led the company’s Series B round of INR 550m (USD 7.87m) earlier this year. The round also saw participation from earlier investors Aspada Investment and Michael & Susan Dell Foundation. The investors together own a majority stake in the company, cited the CEO.
Shiksha began operations in mid 2015 as a South India-focussed lender and currently has 48 branches across ve states – Tamil Nadu, Telangana, Andhra Pradesh, Karnataka and Maharashtra. It aims to add 12 more branches this year and spread operations to Odisha, Rajasthan and Madhya Pradesh soon, Ramakrishnan said.
The company offers student loans to borrowers from the bottom of the pyramid. These are mainly parents working in the unorganized sector, such as roadside tailors, shermen, auto rickshaw drivers, those working as security guards, electricians, plumbers, etc. The typical borrower earns income in cash and therefore has no proof of income, Ramakrishnan said.
Shiksha has developed a good understanding of this segment’s pro le and behavioural pattern. The sizes of the student loans it offers range from INR 15,000 – INR 30,000, with a tenure of up to 12 months.
The school loans are given to educational institutions. Unsecured loans for working capital needs range from INR 100,000 – INR 1m, whereas secured loans for building infrastructure and purchasing assets vary from INR 1m – INR 25m.
The lender’s loan book stood at INR 1.1bn (USD 15.75m) at the end of FY19. Of this, INR 200m comprised student loans made to 21,000 borrowers and INR 900m were school loans offered to nearly 1,900 schools.
Shiksha’s current net worth is INR 780m and it has 220 employees. Its objective as a lending institution is to reduce school dropout rates and increase quality infrastructure in education, Ramakrishnan stated.
ISFC, Varthana are other domestic players lending to educational institutions. ISFC, as recently reported by this news service, is aiming an INR 2bn (USD 28.75m) capital raise, following an unsuccessful acquisition attempt by Manappuram Finance [NSE:MANAPPURAM] In the student loan segment, the company believes it has no competition.
By Ruby Jacob
Grade: Con rmed
T A R G E T
Shiksha Financial Services India Pvt
Thirumeni Finance Pvt Ltd
Indian School Finance Company Private
Limited
O T H E R S
Zephyr Peacock Management India
Michael & Susan Dell Foundation
Countries
India
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Financial Services
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Principal nance
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Advisory Invitation (Bankers, Other)
Companies for sale Growth Capital Raise Private equity related
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