Indian Higher Education Sector: Public Private Partnership

Dec. 31, 2011 - PRLog -- PPP can provide much needed finance to the higher education sector while serving as an efficient operating
model. Possible PPP structure as suggested in the 2009 E & Y – EDGE 2009 report on Private Enterprise in
Indian Higher Education. The private sector is a key constituent of the higher education segment in India,
accounting for more than a third of all higher education institutions and more than two thirds of all professional
higher education institutions. Strong macro-economic and demographic drivers coupled with the gap in public
spending will only further increase the relevance of the private sector in higher education in the country. Thus
there is a clear imperative for established players to participate in this growth story by building higher
educational institutions of scale.

Establishing strong partnerships between private sector enterprises and the public sector, including the
government and regulators, is the clear need of the hour for this growth to be achieved. At the same time, private
higher education institutions need to embrace best in breed governance, operating and financing models to build
institutions of the highest quality and standards.
Though, not active players in the higher education space at present due to structural and regulatory challenges,
private equity investors could play a key role in the expansion of India’s higher education infrastructure. The
report has attempted to provide an overview of specific considerations that would drive investor interest in the
education space based on our interaction with teams at some of the leading private equity funds active in India.
Possible PPP Structure – The educational institute (special purpose vehicle – SPV) is set up as a Society or
Trust, as per applicable guidelines. The UGC and AICTE or some other government body approves norms and
standards of the institute. The state provides applicable administrative and financial support to the institute.
Capital outlays are met by an educational services entity which provides infrastructure. The educational services
entity charges a fee for use of facilities by the Society or Trust. The infrastructure facilities are transferred to the
institute after several years (Refer to exhibit 5).
Private enterprises have used innovative models and novel strategies to attain scale in the India higher
education segment. As per current enrollment trends, India will see a shortage of 5 mn graduate seats by 2015
and 7 mn by 2020. The constraints are capacity constraints (Refer to exhibit 6), limited seats in IITs and IIMs –
a larger number to abroad, high entrance cut-offs for top universities / colleges, 1,00,000 students graduate from
entirely unaccredited private institutions, quota reservations on the increase and large number of ‘fly-by-night;
operators.
The market for higher education is projected to grow almost three times in the next 10 years; market size for
Skill Development is projected to grow almost ten times, albeit over a smaller base. For this a network of public
and private polytechnics and vocational institutions exists, controlled and supervised by the councils
specializing in each discipline.

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