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Educomp Solutions on road to resurgence with Ebix as stakeholder

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Educomp Solutions, one of the leading digital education companies, is on the road to revival, filling its application under IBC. The company holds an expertise in smart learning solutions based on education principles for schools, governments, teachers, students and parents. It has reached over 30 million learners across 65,000 schools in two decades.
A restructuring proposal was reportedly submitted by Educomp Solutions to a group of bankers led by the State Bank of India. Furthermore, PricewaterhouseCoopers (PwC) was appointed for conducting a detailed techno-economic viability study (TEV study) of the company. As per the subsequent PwC report submitted in September 2016, balance sheet course correction could make the business viable again.
It was in May, 2017 that Educomp’s application under IBC was admitted for processing by the National Companies Law Tribunal (NCLT).
“The purpose of IBC (Insolvency and Bankruptcy Code) is to revive companies like Educomp, Essar Steel, Binani Cements, etc., which have a fundamentally strong model but a stressed balance sheet. This can be done by bringing in a new management with strong balance sheets, and is the only way to revive these vital sectors of the economy. What is important is that the process has produced a highest bidder, which complies with the processes and standards of the IBC, including stringent checks on the connected party issue, which were conducted by M/s Kroll,” said one of the bankers involved in the resolution process, on condition of anonymity.
Following the admission of NCLT petition, the Committee of Creditors (CoC) appointed Mahender Khandelwal as the Resolution Professional (RP). PwC was appointed as the process advisor and BDO was asked to do the transaction audit of the company.
With the Expression of Interest (EoI) by the Resolution Professional, Educomp Solutions garnered a lot of interest from different companies. As per the sources, along with two successful bids, there were 14 companies which showed great interest.
Ebix Inc, a NASDAQ listed company, was one among its highest bidders. It is one of the leading companies in insurance and payment processing software and exchanges. The Committee of Creditors finally chose Ebix over the other bidders.
The decision was reportedly followed by the latter’s agreement to invest Rs 400 crore to revive Educomp Solutions. This included a one-time upfront payment to the lenders of Rs 325 crore and Rs 75 crore as investment in the company to expand the business. The agreement also envisaged that the company’s workforce would be retained. It is believed to be one of the biggest investments in India’s education system in the past year, following the successful funding of BYJU’s, another online education company.
As a part of its expansion plan in India, Ebix has also reserved $300 million for investment in the country. Certainly, this is likely to widen the horizons of the country’s education sector to a great extent.

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