Good Morning Dear Reader, A Business update! There’s a very high chance you are supportive of private enterprise, free markets, and for the right for companies to earn a profit in return for providing valuable services. Sure, you may have some misgivings about the fairness of markets, the quality of India's regulations or the concentration of market power. But broadly, you don’t disagree with capitalism.
Except in two sectors—healthcare and schooling.
For most Indians, the right for companies to make a profit ends where their hospital or children’s school begins. We find it hard to digest that those institutions could be run primarily as businesses, for profit motives. Doctors and teachers are supposed to work for a higher calling, not just money. Ergo, profitable hospitals and schools are viewed with suspicion. This, in a country with some of the most abysmally low spends on healthcare (around 1% of GDP) and education (3.1% of GDP). The only way Indians can get quality healthcare and schooling in the medium term is if more private hospitals and schools cater to the massive market that exists.
That isn’t easy. Especially in schools, where paper regulations still expect a school to be a non-profit business. It is in this environment that Lighthouse Learning, formerly EuroKids, is attempting to change the game at various levels. It operates preschools and K12 schools across the country, spanning various price points and operating models. And since being acquired by global private equity giant KKR in 2019, it has been on an acquisitive tear, buying up schools and preschools. Two-decade-old Lighthouse, like the rest of the world, didn’t see the pandemic coming. The bulk of its business—over 1,500 preschools—were hit the hardest. Even today, they’re back to only 20% of pre-pandemic levels.
But being private equity backed means there’s always an exit counter ticking. Assuming a 5-7 year window for PEs to look for hard returns, Lighthouse is already two years in. How this professionally-run (most schools in India are owned and run by rich and well-connected families), PE-backed chain navigates India’s schooling system will act as a signal to the rest of the ecosystem. #yusufbhandarkar #education #healthcare #environment #schools #business www.multimediastudio.net
