Varthana Nets INR 159 Cr Debt To Scale Affordable Schools, Boost Green Infra

Education-focussed NBFC Varthana has secured INR 159 Cr (about $18.6 Mn) in debt funding from BlueEarth Capital, Franklin Templeton Alternative Investments (Franklin Templeton AIF) and responsAbility. 

While responsAbility subscribed to non-convertible debentures (NCDs) worth INR 65 Cr,  Swiss-based investor BlueEarth Capital subscribed to external commercial borrowings (ECBs) worth INR 69 Cr. Franklin Templeton infused INR 25 Cr in the NBFC. 

The NBFC plans to use the funding to expand access to quality education across India and support schools in building a sustainable and energy-efficient infrastructure, it said in a statement. Further, it also plans to enhance access to solar and renewable energy solutions in schools. 

“The investment from Blue Earth Capital and Franklin Templeton AIF will strengthen our network of affordable private schools, while the investment from responsAbility will support the integration of clean energy solutions by fostering sustainability and long-term resilience in school operations,” said cofounder Steve Hardgrave. 

Founded in 2013 by Hardgrave and Brajesh Mishra, Varthana offers low-cost, collateral-free loans, with customised EMI options, to private schools and students. It provides student loans of up to INR 5 Lakh for degree and post-graduate (PG) courses, two-year pre-university college degrees, certification courses and skill enhancement courses.  

With a presence in 40 cities across 16 states, Varthana claims to have financed over 12,000 private schools and extended over 75,000 loans since its inception.

The company targets school entrepreneurs with credibility in their communities, operating schools that charge a monthly fee of INR 2,100 per student. The company claims to have extended loans to over 4,000 private schools in 15 states till date. 

Further, its financing solutions allow schools to expand their  infrastructure, invest in teacher training as well as introduce new learning methods. 

Varthana’s net profit jumped nearly 6X to INR 30.9 Cr in FY24 from INR 5.4 Cr in the previous fiscal year. Operating revenue grew 52% to INR 284.3 Cr from INR 187.1 Cr in FY23.

“After several years of evolving and refining our approach on the student loan business, the team has found its focus working with larger educational partners in the skilling and upskilling sectors and operating almost entirely through a remote digital process. This resulted in a dramatic increase in business, particularly in Q4 with a great deal of momentum heading into FY25,” the NBFC said in its FY24 annual report. 

The debt funding comes almost four months after Inc42 reported that the Bengaluru-based NBFC raised INR 75 Cr debt from IPO-bound OfBusiness and its financial services arm Oxyzo.

Varthana has raised nearly $180 Mn in funding to date from investors like Elevar Equity, Omidyar Network, Chrys Capital, among others.