Exclusive: Indian School Finance Company Raising INR 40 Cr From Gray Matters

Update: June 15, 2020

According to ministerial filings on June 15, the company had received INR 32.4 Cr in the bank from Gray Matters Capital on June 11.

Hyderabad-based fintech startup Indian School Finance Company is raising fresh funding from US-based impact investor Gray Matters Capital Inc. According to the ministry of corporate affairs (MCA) filings accessed by Inc42, Indian School Finance Company is in the process of raising INR 40.4 Cr from Gray Matters.

In a board meeting on May 8, the company’s board passed a resolution to issue 30 Lakh preference shares to Gray Matters at a price of INR 124.61 per share with a nominal price of INR 10. Prior to this, Indian School Finance Company had bagged $6 Mn in its Series A funding sound from Gray Matters Capital in 2016.

In the filings, Indian School Finance Company stated the company needs this fund to fuel further growth. After the deal is concluded, Gray Matter, which is an existing investor of the company, will hold 20.70% of the shares.

Founded in 2018, Indian School Finance Company is a lending-tech startup which is also registered as a non-banking finance company (NBFC). The startup provides loans to K-12 schools, vocational centres and other educational institutions. It also provides with a credit line to teachers employed at these educational institutes while offering educational loans to students as well.

For schools, Indian School Finance Company offers an unsecured loan of up to INR 15 Lakh while it provides a secured loan of up to INR 2 Cr. ISFC aims to assist schools and other educational institutions in capacity-building through infrastructure improvements, thereby enabling students to access quality education.

Besides offering loans to education institutes and teachers, Indian School Finance Company also offers loans to small and medium enterprises (SMEs). According to the company’s website, it has a presence in more than 150 districts across 15 states.

Will Funding Help Indian School Finance Company Skip Acquisition?

In the last two years, multiple companies have been in talks for a possible acquisition of Indian School Finance Company. Recently, a consortium of investors, including CX Partners, the Asian Development Bank (ADB) and the World Bank arm International Finance Corp (IFC), was reportedly in the process of buying 80% stake in the company. The deal was valued at $50 Mn

In 2018, Kerala-based NBFC Manappuram Finance Ltd was planning to acquire Indian School Finance Company in a deal valued at INR 248 Cr. However, the Reserve Bank of India declined the proposal. Homegrown private equity fund Kedaara Capital was also in talks to acquire a majority stake in the company but this deal also didn’t materialise.