– Dr Venunadhan B. Pillai, Associate Director & Head of School, Velammal Global School, Madurai, Tamil Nadu

India’s K–12 education sector is witnessing growing interest from private equity (PE) and other forms of institutional capital. Established schools and school groups are increasingly attracting international education networks, financial investors and strategic partners. In 2019, Nord Anglia Education acquired five established K–12 schools under the Oakridge brand, bringing around 7,000 students into its international network. The International Schools Partnership (ISP) has also expanded its Indian presence through established schools. More recently, the reported acquisition of Pathways School Gurugram by KKR-backed Lighthouse Learning has highlighted the growing financial interest in premium K–12 education. Interestingly, many schools attracting such investments are not start-ups. They are mature institutions with established brands, strong academic records, experienced leadership, developed infrastructure, international partnerships and considerable parental trust. Some already operate near full capacity.

This raises an important question: if classrooms are full and the educational ecosystem is functioning effectively, what exactly is institutional capital buying? The answer requires understanding the distinction between institutional capital and private equity. Institutional capital is a broader category that includes PE funds, pension funds, strategic education groups and international school networks. While PE investors generally seek financial returns and value creation, international networks may prioritise academic collaboration, professional development and expansion. Strategic partnerships can combine the strengths of established local institutions with the resources and systems of larger education groups. Institutional participation in education, therefore, cannot be reduced to private equity buying schools.

Understanding the financial attraction

One starting point is EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), which measures operating earnings before financing costs, taxation and certain accounting expenses. It is neither final profit nor cash flow, but provides an indication of an institution’s operating performance. For schools, investors may examine EBITDA margins, revenue growth, fee collection, operating costs, capital expenditure and EBITDA per student. Together, these indicators help assess the stability and sustainability of a school’s financial model. The reported acquisition of Pathways School Gurugram by Lighthouse Learning illustrates this interest. The transaction was reportedly valued at approximately ₹1,500 crore. The school had around 1,600 students, average annual fees of nearly ₹10 lakh and estimated EBITDA of about ₹110 crore, placing the reported transaction value at approximately 13 times EBITDA.

The significance lies in the institution’s established student base, infrastructure and earnings potential. Its valuation suggests that a mature school can be a substantial operating asset even without significant scope for additional enrolment. However, this transaction should not be treated as a standard valuation benchmark. Schools differ in fee structures, operating costs, property arrangements, infrastructure, educational models and growth prospects.

Value beyond enrolment

Traditionally, school growth has been associated with increasing student numbers. However, mature institutions can create value through operational efficiency, revenue diversification and improved resource utilisation. Fee realisation, student retention, boarding, transport, sports and enrichment programmes can strengthen revenue. Procurement, energy management, technology and shared administrative services can improve operating efficiency. However, education cannot be reduced to cost optimisation. Cutting expenditure without considering its impact on teaching quality, student wellbeing and learning outcomes can undermine the institution itself. Efficiency must remain aligned with educational objectives. A significant part of an established school’s value is accumulated over time. Parental trust, academic reputation, alumni networks, university acceptance records, international partnerships and institutional culture influence student demand, retention and fee sustainability.

A new school can develop impressive infrastructure relatively quickly, but it cannot immediately replicate decades of educational credibility and parental confidence. In this sense, investors may be buying something difficult to create: time. Established schools may also have scarcity value. Their location, land, infrastructure, accreditation, leadership, academic reputation and institutional systems collectively create a market position that is difficult to replicate.

Building larger educational platforms

An established school can also serve as an anchor for a broader educational platform. It may provide the foundation for additional campuses, acquisitions, shared technology, centralised procurement, professional development and international academic partnerships. While the original institution may have limited scope for enrolment growth, the larger platform could offer considerable expansion opportunities. Institutional participation can bring substantial benefits, including investment in infrastructure, technology, teacher development and student services. Larger networks can also facilitate international collaboration, professional learning and access to shared resources. However, financial objectives do not always align with educational priorities. Pressure to improve margins, increase capacity utilisation or standardise operations can affect teaching quality, teacher capacity, student wellbeing and institutional identity.

Parents may welcome international exposure and improved facilities but remain concerned about changes to fees, leadership, staffing, academic practices and school culture. Investments in technology, infrastructure and international programmes, alongside expectations of financial returns, could also contribute to higher fees or additional charges. Teachers may benefit from structured professional development and wider career opportunities. At the same time, larger organisations can introduce stricter performance monitoring and operational accountability. Expectations around admissions, student retention and parent engagement may also add to their workload. Teaching and learning must remain their primary responsibility.

Implications for school education

As more established schools join larger educational platforms, India’s school sector could see greater concentration of institutional expertise, technology and operational resources. Larger networks may benefit from economies of scale, while independently managed schools can continue developing distinctive educational models and preserving their identities. The central question is whether additional resources, expertise and scale translate into lasting educational value. Acquisitions should not be assessed solely through revenue, margins or asset valuations. Teaching quality, student experience, teacher development, institutional culture and parental confidence are equally important measures of success. The legal and organisational structures through which institutional capital enters school education also deserve attention. Ownership, property, management and support services may be structured differently across transactions. In the case of Pathways, the reported valuation alone does not establish what was acquired — the educational operation, property, management platform, brand, future earnings potential or a combination of these.

This changing environment also highlights the need for greater financial literacy among school leaders. Alongside learning outcomes, teacher quality, student wellbeing and parent satisfaction, they must understand fee collection, operating margins, capacity utilisation, capital expenditure, cash generation and long-term financial sustainability. This does not mean turning schools into commercial enterprises. It means understanding the financial foundations necessary to sustain educational quality and invest in teachers, infrastructure, technology and innovation. Ultimately, institutional investors may see value in established schools that extends well beyond enrolment figures. Accumulated trust, predictable demand, institutional capability, scarce infrastructure and strong partnerships can make mature schools attractive investments. A school does not need vacant classrooms to retain its value, nor must its future depend entirely on increasing enrolment. Much of its worth may already have been built through years of educational achievement, parental confidence and institutional development.

Understanding the new economics of schooling is therefore not simply about commercialising education. It is about recognising the resources and institutional strengths required to sustain educational excellence in an increasingly institutionalised sector.

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