Dubai entrepreneur to Everonn Education’s rescue

Chennai-based Everonn Education has got a much needed breather with Dubai-based Varkey Group’s Gems Education acquiring 12% stake in the company.

Everonn, which has been reeling under a wave of embarrassment following the arrest of its managing director, P Kishore, by the Central Bureau of Investigation in August on charges of bribing an income tax official with Rs50 lakh, views the Rs138.23 crore investment positively.

Susha John, who was appointed CEO following the arrest of Kishore and the subsequent resignation of chairman Jamshed J Irani, said this investment will raise the operations of Everonn to great levels. “The Varkey Group will not just help Everonn in achieving our goals of creating value to all our stakeholders but also realise our dream of becoming a leading player.”

The investment by Varkey, promoted by NRI Sunny Varkey, comes at Rs528 per share, a premium of more than 50% over the Everonn stock’s closing price on Monday.

The stock has lost over 16% since Kishore’s arrest.
Varkey will also make an open offer to Everonn shareholders in accordance with Sebi guidelines, and subject to approvals, will join Everonn as co-promoter.

The Dubai-based group is one of the largest private operators of kindergarten-class 12 (K-12) schools globally, covering over 100,000 students from 143 countries. Everonn, too, operates in the K-12 segment under the KenBridge brand.

Experts see the deal benefiting both the players.

Narayanan Ramaswamy, head, education practice, KPMG said Varkey is a lot into schools, a segment Everonn has been trying to establish itself in. “The global presence of Varkey should help Everonn spread its wings in different geographies.”

According to Amitabh Jhingan, education sector leader, Ernst &Young, this deal will help Varkey penetrate deeper into India in the schools space.

Nikhil Gandhi, chairman of SKIL Infrastructure, which holds around 20% in Everonn, said the deal is a serious commitment and investment. “We will continue to stay invested. This deal is a major step forward on part of a global firm to invest in an Indian firm.”

Gandhi conceded that whatever happened with Everonn’s managing director was upsetting, but said the issue was at an individual level, while Everonn as a whole was a strong enterprise. Varkey has been looking to strengthen its presence in India for a while now, he said, adding, “Everonn was chosen because of its business model.” Analysts view the deal positively, but feel more is needed to boost the stock’s prospects.

“Everonn needs more players to invest and show that the issue was a one-off instance involving an individual,” said an analyst from a brokerage in Mumbai.