Classrooms get capital as PEs open their wallets for education sector

When private equity firm Kedaara Capital backed Orchids International School in 2023, it marked more than just another cheque in India’s fast-growing education sector. It was part of a deeper shift, showing private equity (PE) investors are now doubling down on the education sector, betting that the future of education lies in scalable platforms, brand consolidation, and hybrid models that blend classrooms with technology.

A new wave of capital is reshaping how schools are run and scaled. Despite tight regulations and public scrutiny, the sector is fast becoming a serious play for private capital.

“Globally, within education, school education or K-12 education is by far the most popular asset class and it has seen the greatest amount of private equity investment in the 10 to 15 years,” noted Amitabh Jhingan, Partner, Education Strategy Practice and Global Education Sector Leader, EY-Parthenon India.

The K-12 education segment in India is one of the largest and fastest growing in the world, with over 260 million enrolled students, making it a highly attractive market for long-term investors, noted Nishesh Dalal, Partner and Private Equity Leader, Deloitte South Asia.

Investor strategy

While India’s regulatory constraints, such as the not-for-profit requirement for CBSE and state board affiliation, pose real challenges, that hasn’t deterred investors. Instead, they’re taking cues from global markets. PE funds invest in for-profit education service companies, i.e., entities that manage content, teacher training, tech, admissions, and school infrastructure. The schools themselves are run by trusts, but the surrounding ecosystem is increasingly owned and operated by PE-funded platforms.

“The investments are not happening in the schools themselves,” explains Jhingan. “They’re happening in companies that provide services — curriculum, student acquisition, school design, digital tools — on long-term contracts to private schools.”

Dalal noted the same thing. “PE firms are increasingly acquiring stakes in both legacy and newer school chains, drawn by the sector’s scale, growth potential, and the rising demand for quality education among India’s expanding middle class. PE-backed schools typically see upgrades in infrastructure, adoption of digital tools, improved teacher training programs and enhanced regulatory compliance (i.e. safety and accessibility standards),” he added.

The real inflection began post-2010, with serious acceleration in the last five years. From just one or two education deals a year in the early 2010s, the sector now sees 3–5 meaningful K-12 transactions annually.

“Before 2020, there were only a handful of deals,” Jhingan notes. “But in the last five years, we’ve seen over 15 significant transactions in the private K-12 space.”

Apart from growing demand, investor comfort with service-led models has matured. Many Indian platforms are now acquiring schools or groups of schools to add scale under one brand.

“The capital being provided to these platforms is then used to acquire individual schools or school chains to rapidly scale up,” says Jhingan.

For firms like WestBridge, the model offers recurring cash flows, operational leverage, and long-term value creation, especially when bundled with adjacent services like test prep or edtech.

“Education represents the second largest portion of household expenditure in India after grocery, underscoring a pressing need for affordable, accessible, and quality solutions, particularly within the K-12 and higher education segments. We believe technology is key to solving this at scale and remain optimistic about its potential to make a transformative impact on India’s education sector,” said Sandeep Singhal, Co-founder and Managing Partner, WestBridge Capital.

While exits are still few, investors are eyeing strategic sales or consolidated education platforms as possible paths to monetisation.

“The Indian private school market is reaching an inflection point, with providers beginning to achieve meaningful scale,” says Jhingan.

(with inputs from bl intern Nethra Sailesh)

Published on July 11, 2025