MT Educare raises Rs110 crore debt from Xander Finance

Bengaluru: MT Educare Ltd, popularly known as Mahesh Tutorials, has raised Rs110 crore in structured debt from non-banking financial company (NBFC) Xander Finance Pvt. Ltd, according to two people familiar with the transaction.

The education services company will use the funds to refinance existing loans and fund expansion, said one of the two people cited above.

This is Xander Finance’s second investment in the education industry as the NBFC aims to expand its non-real estate lending portfolio.

In 2016, Xander Finance has invested Rs80 crore in Bengaluru-based Jain Group of Institutions or JGI Group, in the former’s first deal in the education space. The debt was used to refinance loans and fund growth.

“There are a lot of opportunities in the education space, much more than real estate where underlying sales are very slow,” said one of the people cited above, who didn’t wish to be named.

A spokesperson for Xander didn’t respond to Mint’s queries.

Mahesh Shetty, chairman and managing director of MT Educare, declined to comment.

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MT Educare, which went public in 2012, is popularly known as Mahesh Tutorials. It prepares students for competitive examinations. Xander Finance, which predominantly invested in real estate in 2016, plans to expand its focus in 2017-18.

“Xander Finance is looking at opportunities in consumer-oriented sectors like healthcare, food processing, logistics which are inherently backed by good cash flow generation,” said the first person cited above.

“Quality deals in real estate have dried up. Most NBFCs are looking at building their portfolios aggressively and if real estate doesn’t give them enough opportunities, they can look beyond it in order to grow their loan books faster,” said Rajeev Bairathi, executive director and head of capital markets at property advisory Knight Frank India.

The education sector has attracted investors of all kinds. Private equity fund Cerestra Advisors Ltd, whose investment theme is to buy out large educational infrastructure assets, has built a portfolio of assets of around $100 million and is looking to add another $100 million of assets in the next six months.

“Once we build the portfolio, we would be ready to do an InvIT (infrastructure investment trust),” said Jasmeet Chhabra, managing partner, Cerestra Advisors.