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Startups

Indian lender to private schools plans new funding round

Varthana in talks to raise $50m

Varthana has outstanding secured and unsecured loans to over 3,500 schools.   © Reuters

NEW DELHI -- Varthana, which specialises in debt financing for private schools, is planning to raise a fresh funding round of $50 million, said sources close to the deal.

The Series D funding round is expected to be led by existing investors and will also see participation from new investors. The company has also roped in Kotak Investment Banking to advise on fundraising, it said.

Varthana did not respond to an email seeking comment sent on Tuesday.

Operated by Bengaluru-based Thirumeni Finance, Varthana raised an undisclosed amount from C-Quadrat Asset Management in May. It raised 3.5 billion rupees ($49.1 million) through the sale of new shares and a secondary stake led by ChrysCapital, and existing investors including Kaizen Private Equity in April last year.

Varthana also counts Elevar Equity, LGT Venture Philanthropy, and Omidyar Network among its list of backers.

Set up by Brajesh Mishra and Steve Hardgrave in 2013, Varthana provides loans ranging from 500,000 to 1 billion rupees primarily to private schools catering to students from low-income households. The startup also assists schools by improving their teaching quality and technology.

Varthana has outstanding secured and unsecured loans to over 3,500 schools.

In April 2016, Varthana raised 930 million rupees in a Series B round from Kaizen Private Equity and Zephyr Peacock India. The Series A round raised 320 million rupees from former Credit Suisse banker Vikram Gandhi and Genpact founder Pramod Bhasin in 2015.

Varthana’s competitor, Indian School Finance, is raising up to $30 million through a mix of equity and debt from the International Finance Corp., a part of the World Bank group.

Indian School Finance caters to affordable private schools, colleges, coaching centers, education small and medium-sized enterprises and retail loans to teachers. It operates out of 155 locations across 15 states through a hub-and-spoke model and has over 345 employees at the end of March.

Another player operating in the space, Shiksha Finance, raised a 550 million rupees in a funding round led by Zephyr Peacock India Growth Fund.

DealStreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently acquired a majority stake in the company.

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