We didn’t want to time the market: Veranda Learning CEO Suresh Kalpathi

The Chennai-based company, which plans to list on the exchanges on April 7, has set the price band for the initial public offering at Rs 130-Rs 137 per share.

“If somebody was wanting to price their issue to perfection, this is not the most conducive market,” chief executive Suresh Kalpathi said on Thursday. “If your pricing is reasonable, to ensure that there is a significant return on equity for people who participate, my guess is that any market is a great market. We clearly are not looking at timing the market or pricing to perfection. That’s not what creates long-term value.”

Through the IPO, the company intends to repay or pre-pay borrowings of up to Rs 60 crore. It will use about Rs 25 crore to pay for the acquisition of Edureka and about Rs 50 crore towards growth initiatives, he said.

“Given the size of the issue, we did not want to delay the most optimal point from a business perspective. So, we didn’t want to try and time the market. We just wanted to ensure that from a business and operating perspective, it was the right time for the money to come and that the business is poised to take full advantage of it to create a maximum return on equity,” Kalpathi said.

A ‘substantial part’ of the debt that was raised to complete the company’s acquisitions is getting ‘extinguished’ with the IPO, he added. “On a net basis, the company will be zero debt post-IPO. And that sets the stage for us to build it very significantly.”

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The company is bullish about the IPO, he said, as education is a defensive bet. “In India, the last thing families – at all levels – cut back on is education spend. So, it’s an extremely defensive sector,” he said.

Veranda is not an ed-tech player, but is rather an education company, he added.

“Ed-tech is the technology that enables education, it’s not education. Education is provided by very high-quality tutors with good content with an ability to create outcomes for people. That’s education, technology is an enabler,” Kalpathi said.

Veranda currently gets more business online than offline, which Kalpathi attributed to the Covid-19 pandemic.

The company acquired Chennai-based Race Academy in November 2020 and Bengaluru-based upskilling platform Edureka in September 2021 to expand its product portfolio.

Veranda offers diversified and integrated learning solutions in online, offline, hybrid and offline blended formats to students, graduates, professionals and corporate employees.

The company provides long- and short-term preparatory courses for students preparing for UPSC exams, state public service commission, staff selection commission, banking, insurance, railways and chartered accountancy.