Narayana Murthy's VC fund Catamaran may invest $10 mn in Manipal

MUMBAI: Three decades after N R Narayana Murthy and Azim Premji failed to find common ground to work together, co-founder of Infosys may soon be a co-investor with his information technology peer and Wipro chairman in an education venture. Catamaran, a proprietary venture capital fund of NRN, is prospecting a potential investment in Manipal Universal Learning, in which PremjInvest invested $42 million almost two years ago. Catamaran is evaluating a deal even as Manipal, an Indian cross-border education story, is mulling a big-ticket initial public offering (IPO) possibly within the next eighteen months.

The discussions pertaining to a possible investment are still in early stages and hence the details remain sketchy even though sources familiar with the situation said Catamaran could invest up to $10 million. While PremjInvest has a committed corpus of nearly $1 billion, Catamaran is a smaller $129 million fund, tracking venture investments. The possibility of having NRN and Premji as investors could well be a coup for Manipal, which is looking at the capital market.

Before Murthy founded Infosys, he had a meeting with Premji for heading Wipro’s then nascent IT business. The meeting, obviously, went nowhere, with Premji later dubbing the encounter as just a drink at Welllington Club, and finding Murthy too highpowered for us and Murthy very happily admitting, “He rejected me. But I am very grateful to him for that.”

Global success and billions later, the two might come together at Manipal Universal Education . However, Catamaran’s investment head Arjun Narayan said the fund will not comment on speculation as a matter of policy, while Manipal Education MD Ranjan Pai said, “There is nothing as of now”. Manipal Universal Learning is part of the Rs 2000-crore Manipal Education and Medical Group (MEMG), which is a strategic player in education and healthcare services.

“There is an intent on the part of Catamaran and Manipal to strike a deal, but it depends on how the IPO story develops,” a second source said.

Pai declined to comment any further stating that his company’s board will have to meet and discuss on IPO and then go in for formal discussions with bankers. However, informed sources said Manipal Education could be looking at $1-1.25 billion valuation for its public offering, which could be launched in the second-half of FY12. Informal discussions have been underway with the bankers, they said.

Manipal’s education revenues could touch $250 million by FY12. Its revenue is equally split between India and overseas operations, which include a large acquired campus in the Caribbean island of Antigua. The other international campuses are spread across Dubai, Malaysia and Nepal.

In January this year, NRN’s Catamaran made its maiden investment in a pre-IPO deal with SKS Microfinance, where it invested Rs 28 crore for a 1.3% stake. Catamaran picked up this stake at a steep discount to the issue price as the microfinance company looked at roping in marquee investors ahead of the IPO.

Meanwhile, Catamaran along with US venture fund Accel Partners is closing a $1.2 million investment in Ace Creative Learning – a company that provides educational support services to schools and colleges. “We are currently looking for scalable and capital efficient businesses across fields such as FMCG, healthcare, e-commerce, agri-business and defence,” Narayan of Catamaran told TOI.

Last year, Murthy sold shares worth Rs 174.3 crore, or $37 million, and his wife Sudha Murty off-loaded shares worth Rs 430 crore, or $92 million, to set up Catamaran, named after a sailboat. Later, NRN brought in an MIT grad Narayan, who is in his late 20s, to spearhead the fund.