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ASK Pravi Capital acquires Gateforum, eyes more buyouts in test preparation industry

The stake in the Hyderabad-based company was acquired for an undisclosed amount from Educomp Solutions, a diversified education services firm.

, ET Bureau|
Updated: Aug 27, 2014, 04.00 PM IST
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The stake in the Hyderabad-based company was acquired for an undisclosed amount from Educomp Solutions, a diversified education services firm. 
The stake in the Hyderabad-based company was acquired for an undisclosed amount from Educomp Solutions, a diversified education services firm. 
MUMBAI: Private equity firm ASK Pravi Capital is building a platform for acquisitions in India's test preparation industry where it will look to invest up to Rs 75 crore.

This comes after the PE firm closed acquisition of 55% stake in Gateforum Educational Services, which prepares students for entrance exam into post-graduate programmes in engineering.

The stake in the Hyderabad-based company was acquired for an undisclosed amount from Educomp Solutions, a diversified education services firm which has been divesting assets under debt load.

Gateforum will now be used as the platform to initiate a rollup strategy, where small companies are consolidated to take advantage of scale.

"We want to consolidate the test preparation industry by making acquisitions across different segments," said Anand Vyas, managing partner at ASK Pravi Capital. He said the current market in test preparation is divided into two segments - aptitude based exams like CAT, MAT and bank probationary officers exams and subject based exams like JEE, medical and GATE.

ASK Pravi Capital will look at acquisitions across segments, from smaller tuck in deals of Rs 10-15 crore to large deals of over Rs 100 crore where it may rope in another PE fund. "The idea is to acquire companies in these segments which are professionally run and less promoter-academic run, where ownership and management are different," said Vyas. He feels that players in test preparation industry were focused on growth in their niches but have hit saturation after a point, which could fuel consolidation.

Gateforum is profitable, with Rs 40 crore in revenue during the last fiscal year. The coaching firm has a network of centers in 65 cities, through a mix of owned and franchisees.

Gateforum, founded by IIM and IIT graduates in 2005, prepares students for Graduate Aptitude Test in Engineering (GATE) for which 9 lakh students appeared in 2014. The candidates appearing for the exams are also increasing as the results are used for recruitment by PSUs like NTPC and IOC.

"We see an increase in competitiveness of these exams and thus demand for coaching as more PSUs start using the results for recruitment," said Aditya Reddy, CEO and cofounder of Gateforum.

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