TeamLease raises '100 cr from ICICI Venture, Gaja Capital

Staffing and education company TeamLease Services has raised '100 crore from ICICI Venture Funds Management Co. and existing investor Gaja Capital Partners to fund the expansion of its vocational training business

April 06, 2011 4:38 IST | India Infoline News Service
TeamLease, focused on the organized temporary staffing market since 2003, entered vocational education by acquiring the Indian Institute of Job Training (IIJT) last year. It plans to use the capital raised to enhance this business, including a roll-out of more IIJT centres across India, building a corporate training business and for its TeamLease University project, said managing director Ashok Reddy.

IIJT operates more than 150 centres that deliver classroom and satellite training in areas such as finance and accounting, information technology (IT) infrastructure, sales and marketing, retail and soft skills. TeamLease is setting up a vocational education university in Gujarat to help plug an increasing skills gap in India's labour force.

It will be the country's first university for vocational education. "We would increase our footprint with the capital that we have raised," said Reddy. "We are looking at acquisitions of firms that can complement our current business. We are in talks but nothing has been finalized yet." "It's not just about growth," said Gopal Jain, managing partner, Gaja Capital, the smaller contributor in this round of fund-raising. "They are innovating as well, the Gujarat university being a point in case."

Reddy refused to say how much each PE firm has invested but said TeamLease's original promoters continue to hold a majority stake. India's vocational training market is estimated at about $1.6 billion ('7,120 crore) and is growing at 25% a year, according to Research and Markets, a global market research and data firm base in Ireland. Demand for skilled workers across sectors from manufacturing to retail and hospitality is fuelling the market for vocational training institutes, it said in a report on its website. Insufficient skilled labour is a major worry in India, the second fastest growing major economy. The country has around 7,500 technical institutes for higher education and only 2,500 polytechnic institutes, according to data available with the All India Council for Technical Education,the technical education regulator.

There is a huge interest among PE firms when it comes to vocational training firms, said Sunil Jain, vice-president, MAPE Advisory Group Pvt. Ltd, an investment bank. Jain leads MAPE's education deals segment, which is currently working on three education deals, including a school company, a tutorial and a technology firm. "There are only a few segments in the education space that do not face regulatory hurdles. So, PE firms tend to like vocation training firms," he said, adding that so far investments in vocational training have mostly been in the space of test preparation and coaching centres for engineering entrance exams. "Where we will see action now are the non-engineering streams like CA (chartered accountancy) and medical preparation, as most of the big firms in the engineering space have been funded already," he said.

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