Friday, February 18, 2011

Investing in Formal Education In India?

Investing in Formal Education In India? My thoughts on risk!

As an investor in the education space, I sometimes ask other investors who are investing in Formal education space in the country, whether they have built in risk of regulation clamping down on the popular "innovative structures"  (aka services and real estate companies attached to institutes) and almost without exception they look at me with disdain. They clearly see no risk (or some who do, many would not know how to model it in their valuation and simply believe in the greater fool theory) . Or they get opinion from a advisor/lawyer who makes a living out of advising companies to take this route, sidestepping regulation.

It turns out it was silly of me to expect them to see this risk. Many of these foreign investors, who operate out of the country take recourse to these innovative structures (well silly me again! these are in fact quite standard) to operate out of the country through their advisory arms, which are set up as independent companies, apparently to give investment advise (to themselves!)

Sorry guys (and girls) the joke is on me!

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