Tree House Education & Accessories Ltd., a pre-school education service provider, is looking for buyers to dispose of four school buildings along with land it owns.
The company’s board has already approved the proposal for liquidation of these assets to unlock value and deployment of the capital for pre-school network expansion purposes as well as to retire debt.
The schools will continue to be managed by Tree House, and only the ownership of the assets will change. Two of these schools are located in Baroda while one each at Jhunjhunu in Rajasthan and Goregoan in Mumbai.
“We are currently talking to people who could be interested to acquire these assets. We have also sounded out to leading real estate consulting firms to arrange buyers. Currently, the return on capital employed is 14 per cent, and after the sale of these assets, this can go up substantially. This will be in the interest of shareholders,” Rajesh Bhatia, Managing Director, Tree House Education, told The Hindu .
“Becoming asset light will increase the efficiency of capital employed and free capital for future growth. We have not set any target (towards sales realisation),” Mr. Bhatia added. In the books of the company, these assets are valued at Rs.75 crore.
Starting in 2003, Tree House Education has now grown to an entity having 426 centres across 55 locations, out of which 322 operated by the company.
The company provides management services to 24 schools having classes from kindergarten to 12 grade, including the four put on the block.
The company, which has been adding 80 schools every year over the past four years, is planning to add 230 self-operated schools and 120 franchisees till financial year 2016. In the South, the company has 20 schools in Bangalore, 12 in Hyderabad and 3 in Chennai. Four private equity firms, including Omidyar Network, Foundation Capital, Matrix Partners and Aditya Birla PE, have invested in the company and together control 38 per cent stake.
At the end of March, Tree House had debt worth Rs.66 crore. It had raised Rs.112 crore through IPO in 2011. In the last financial year, the company had reported a net profit of Rs.33 crore on revenue of Rs.121 crore. Shares of the company closed at Rs.247.35, down 0.24 per cent, on the BSE.
