We've written before about why private equity is buying Indian school chains and how education deals actually get structured. Most Indian schools, though, are run by a trust, society or Section 8 company (the differences between the three matter here), and a trust or society has no shares to buy (our inference; counsel should confirm). So what is private equity actually backing?
The Legal Premise
CBSE's “Role of Society” document puts two duties on the body that runs an affiliated school. Clause 9.1.3 requires it to “ensure that the school is run as a community service and not as a business and that commercialization does not take place in the school in any manner whatsoever”. Clause 9.1.4 requires it to “ensure that the funds accruing from the school are spent for the benefit of the same school and extending the cause of education” (CBSE, Role of Society). The document refers to the Affiliation Bye-Laws, 2018; whether the clauses remain current is a question for counsel.
The law does not ban a surplus. In T.M.A. Pai Foundation v. State of Karnataka (31 October 2002), the Supreme Court is reported as saying “There can, however, be a reasonable revenue surplus, which may be generated by the educational institution for the purpose of development of education and expansion of the institution” (Indian Kanoon). In Modern School v. Union of India (2004), the majority is reported as saying “What is, however, prohibited is commercialization of education” (Vaquill). Both passages are as reproduced on those sites. Separately, section 13(1) of the Right to Education Act bars schools covered by the Act from collecting capitation fees at admission (India Code).
Who may run a school also varies by state. A Centre for Civil Society (CCS) paper of 7 May 2026 says Haryana's rules allow companies not registered under Section 8, and that Uttar Pradesh's 2022 regulations permit companies to establish secondary schools, with the non-profit requirement remaining (CCS). These points rest on the cited paper, not on rule text, and counsel should confirm them.
Our view: the gap is the line between a reasonable surplus and a disguised profit. The same CCS paper says schools and regulators “must guess where surplus ends and 'profit' begins”.
Three Structures Described in Public Reports
NewsBytes reported on 2 August 2026 that PE firms are investing in education through service, management and infrastructure companies that provide outsourced services to non-profit school trusts (NewsBytes); the article does not name a source for the claim. Business Standard (22 July 2026) says most institutions are still owned and managed by individual trusts, societies or local promoters, and that premium operators use “asset-light expansion models through management contracts and long-term leases” (Business Standard).
- The management and services company. The most prominent reported case is K12 Techno Services, which runs the Orchids brand. Inc42's 2023 report on a funding round described a company that supplies curriculum-based content and technology to schools, rather than one that owns or operates them (Inc42). The Ken reported in April 2026 that “the buildings and the payroll remain with the original owners, while K12 takes over the management”, under contracts it put at 50 years (The Ken). Venture Intelligence, citing Mint, reported Vitruvian Partners investing Rs 1,159 crore for a stake of nearly 16%, of which Rs 150 crore was primary and the rest bought from existing investors (Venture Intelligence). On these reports the original owners keep the school; the sources do not state their legal form. For the other side of the question, see our note on whether an Indian school can be a private limited company.
- The brand and franchise licence. KKR first invested in Lighthouse Learning in 2019 and, after a further investment with PSP Investments in November 2025, continues to hold a majority (Business Standard; Business Wire). The Ken reported in 2024 that the group runs “both owned and franchise models” (The Ken). It raises a regulatory question. One published CBSE affiliation letter (to a Ghaziabad school, dated 1 October 2020) says the school “shall be solely responsible for any legal consequences arising out of the use of school name/logo/society/trust or any other identity” (CBSE affiliation letter). On that wording the consequences of name use sit with the school. How that interacts with a licence is a question for counsel.
- The property and lease company. Business Standard names long-term leases as part of premium operators' models, and our structuring guide describes a property company leasing to the operating company on a long-term lease. This article cites no school-level example of this structure from Indian company filings.
What Is Documented, and What Is Not
| Point | Status | Basis |
|---|---|---|
| Investor-backed companies supply management, services or brand to schools run by others | Reported in the press for K12 Techno; described generally by NewsBytes | Secondary press; the 50-year term is single-source |
| Fee, royalty, rent and tenure terms | Not publicly documented | No public source cited |
| Legal form of the owners of Lighthouse or Orchids schools | Not publicly documented | No public source cited |
| CBSE duties: community service, funds spent on the same school | Quoted from the CBSE document (clauses 9.1.3, 9.1.4) | Primary text |
| Surplus allowed, commercialisation barred | Reported passages of two Supreme Court judgments | Primary text as reproduced on third-party legal sites |
| Companies allowed to run schools in Haryana and UP | Stated by CCS only | Secondary; no rule text cited |
| CBSE's test for approving a transfer of a school | Fee heads exist in CBSE’s fee schedule; the approval test is not set out there | CBSE Circular 03/2021 |
| Court or regulator ruling on these structures | None cited here | No public source cited |
What Investors Should Diligence
These are questions for counsel.
- Who runs the school, under what law? Identify the managing body, its form and the state regime. CCS's state-by-state table suggests state rules differ.
- Where does money leave the school? List every payment to an investor-linked entity: services, royalty, rent. Test each against clauses 9.1.3 and 9.1.4 and state fee law. A reproduction of the Uttar Pradesh Self-Financed Independent Schools (Fee Regulation) Act, 2018 says not more than 15% of a school's total income in a financial year may be transferred to the eligible educational entity as a development fund, which “shall not be utilised for any commercial activity” (Casemine). The Act's current status is unclear, and whether a service fee counts as such a transfer is for counsel.
- Are the accounts separate? A 2018 Lok Sabha reply says CBSE inspection checks whether the school keeps accounts separate from the society, trust or company running it (Ministry of Education).
- How does control change hands? A trust or society has no shareholders to sell; that is our inference, not a sourced point, and counsel should confirm the route and approvals. CBSE's fee schedule (Circular 03/2021) lists “Permission of name change of school/society” and “Transfer of school from one society to another” (CBSE Circular 03/2021). The schedule lists fees only; it does not set out the approval test.
- What is the basis of the multiple? In Wendel's Globeducate investment, the same price read as about 17x forward EBITDA including IFRS 16 lease accounting on Wendel's release (16.7x in the GSI directory) and 19.4x excluding it on GSI's figures (GSI Education; Wendel). See our valuation article.
- Does the horizon fit? Business Standard says funds typically invest for five to seven years. The Ken quotes an unnamed K12 senior executive: “It takes about 12 years for a school to break even before you start seeing profits.”
What Promoters Should Ask
- What am I licensing, and what comes back? Who owns the brand, curriculum and data when the contract ends?
- Can I defend each fee? Ask counsel whether each fee is tied to a real service the school receives, before signing.
- What happens at termination, and which approvals are needed? Ask what rights the school keeps. Name change and transfer have their own CBSE fee heads; state approvals are for counsel.
Risks and Criticisms
The public evidence is thin and mostly from one outlet. No regulator order, court case or parent protest tied to a named PE-backed school operator is cited here, which is not proof that none exists.
- Cost cutting. The Ken reported in August 2025 that at Glendale Academy, Hyderabad, owned by Global Schools Foundation (described in the report as backed by Apollo Global Management), teaching and support staff fell 20% and student numbers fell 20% over two years (The Ken). This is a paywalled, single-source report on one school.
- Capacity. Business Standard quotes ISB's Karthik Balakrishnan warning of “excellent buildings” that are “somewhat under-resourced” if growth outruns trained teaching capacity.
- Related-party flows. CCS says the Modern School case reported that certain Delhi schools diverted tuition surpluses to trusts. The paper does not discuss PE.
- A signal from the universities case. On 17 September 2026 the Supreme Court, in Ayesha Jain v. Amity University, Noida, said “we make it clear that no private university shall be allowed to be run as a profit-making institution” (Supreme Court order). The next hearing is listed for 19 November 2026, so the order appears to be interim. It concerns universities, so any link to schools is an analogy, and we would not treat it as binding on school operators.
- The other side. Business Standard says investor strategy is “less on raising fees and more on expanding networks, improving occupancy and building stronger brands”. Business Standard also says fee hikes remain subject to competition and, in many states, government regulation.
Our View
The model is workable, but only as strong as its weakest invoice. The cases allow a reasonable surplus and bar commercialisation, and on CCS's account no binding standard defines the line between them. A structure that moves the return to a services, brand or property company sits close to that line. Documentation showing that each charge is justified and no larger than the service it pays for is, in our view, the main protection. Whether it is enough is for counsel. Rules also differ across states and boards, so no single template fits.
For investors: screen legal form and state regime before building a model. Ask counsel for a written view on each fee stream, and price the deal assuming a fee could be challenged. Do not underwrite returns that depend on fee increases. Put the term of every long contract on the term sheet, quote multiples with their basis, and test a break-even period longer than the fund horizon against the exit.
For promoters: be selective about what you license, because brand, curriculum and data outlive a contract. Insist on step-back rights that keep the school running if the services company fails or leaves. Keep the school's accounts clean and separate. Resolve succession first.
The deal record is mostly press reports. No fee percentages from primary documents and no court ruling are cited here, so anyone quoting a typical management fee or market multiple for an Indian school is working from less than they imply. Legal work on these structures belongs with qualified legal counsel; MAS Advisory works on the regulatory, commercial and deal-structuring side alongside counsel.
Evaluating a school investment or a management-contract proposal?
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General guidance only, drawn from public sources as at 7 October 2026. Some quotations are as reproduced on third-party sites and should be checked against the originals before reliance. This article gives regulatory, commercial and deal-structuring perspective; it is not legal, tax or investment advice, and MAS Advisory gives no tax opinions. Legal points are framed as questions for qualified counsel.