Elevate directs Rs 1,100 crore IPO funds to K-12 affiliates

Elevate Campuses Limited plans to deploy Rs 1,100 crore of IPO net proceeds to acquire 14 K-12 entities and campuses from promoter-affiliate sellers. The allocation represents approximately 52.38% of the proposed Rs 2,100 crore gross issue and falls Rs 15.71 crore below the Rs 1,115.71 crore aggregate equity value reported as of March 31, 2026.

Why is Elevate using IPO funds for K-12 affiliates?

Elevate is using IPO funds to consolidate K-12 entities and campuses currently held outside its group by connected entities of its promoters. The connected entities are indirectly owned and controlled by funds of Hillhouse Investment, which are also the ultimate owners and controllers of Genius Bidco Holdings Pte. Ltd. and Genius Rajkot Investment Holdings Pte. Ltd.; the sellers and promoters are therefore fellow subsidiaries.

Elevate has scheduled the full Rs 1,100 crore acquisition allocation for Fiscal 2027, with no deployment scheduled in Fiscal 2028. Its board approved the proposed use of funds on September 26, 2025. Once the transactions close, the K-12 entities and campuses will become Elevate subsidiaries, moving the assets from the promoter-affiliate structure into the company’s consolidated group.

The K-12 acquisition is the largest identified IPO use, ahead of Rs 750 crore proposed for repayment or prepayment of borrowings and related prepayment penalties in Fiscal 2027. Amounts for unidentified acquisitions, strategic initiatives and general corporate purposes were not specified at the Red Herring Prospectus stage. The prospectus caps each of those two categories at 25% of gross proceeds and their combined use at 35% of gross proceeds.

How is the Rs 1,100 crore K-12 affiliate purchase calculated?

Elevate’s Rs 1,100 crore K-12 affiliate allocation is based on equity value, not the Rs 1,824.62 crore enterprise value assigned to the 14 entities and campuses. Enterprise value is the value of the businesses before specified financing and balance-sheet adjustments. The June 20, 2026 valuation reports put aggregate equity value at Rs 1,115.71 crore as of March 31, 2026, including compulsorily convertible debentures.

The six securities purchase agreements require the enterprise value to be adjusted for external debt, cash and bank balances, security deposits, and receivables or payables before closing. Those adjustments will use the latest available audited financial statements of the relevant entities before closing. The final equity consideration can therefore differ from the March 31, 2026 aggregate equity value if those balance-sheet items change.

Elevate plans to fund the Rs 15.71 crore gap between its IPO allocation and the reported aggregate equity value from the Rs 159.18 crore cash balance available on March 31, 2026. The company must retain sufficient cash and complete the closing-date valuation adjustments for this funding structure to operate as disclosed. The prospectus describes the Rs 1,100 crore allocation as payment for the proposed acquisitions from net proceeds.

What securities and campuses will Elevate acquire?

Elevate will acquire equity shares, including nominee shares, and compulsorily convertible debentures from six K-12 holding companies. It entered into six securities purchase agreements on September 24, 2025, each amended on June 23, 2026. The agreements cover K-12 entities and campuses in Karnataka, Telangana, Tamil Nadu, Andhra Pradesh, Chhattisgarh and Maharashtra, as well as a student-accommodation asset in Bengaluru.

The portfolio includes JIRS in Kanakapura; St. Andrews Suchitra and St. Andrews Keesara in Hyderabad; St. Michael’s Alwal and St. Michael’s Mariah International School; Shri Ram Universal School in Chennai; JPS campuses; Billabong High International School in Pune; SET in Bengaluru; and IFM College Hostel in Bengaluru. The schools have affiliations including the Central Board of Secondary Education, Indian Certificate of Secondary Education, International Baccalaureate, Cambridge Assessment International Education and British Curriculum.

PE Bowenpally, comprising St. Andrews Suchitra, St. Andrews Suchitra Land and St. Andrews Keesara, has the largest disclosed enterprise value at Rs 593.30 crore. PE Chennai, which operates Shri Ram Universal School, has enterprise value of Rs 188.57 crore but no positive equity value under the adopted valuation method. Its equity-share value was restricted to Rs 500, representing 50 shares with a face value of Rs 10 each.

Compulsorily convertible debentures are securities that must convert into equity under their terms. Most of the disclosed compulsorily convertible debentures do not carry interest until March 31, 2027, although certain instruments have terms linked to optionally convertible debentures. The transaction consequently transfers both equity interests and conversion-linked securities held by the promoter affiliates.

What would consolidation change for Elevate’s operations?

Elevate’s Fiscal 2026 revenue from operations would be Rs 806.93 crore on a pro forma basis after giving effect to the proposed acquisitions, compared with restated revenue of Rs 568.63 crore. The Rs 238.30 crore difference reflects inclusion of the K-12 entities and campuses in the pro forma financial information. Elevate cites this consolidation as the basis for bringing the assets into its existing platform.

As of March 31, 2026, Elevate and its subsidiaries operated seven student-accommodation campuses with 20,368 beds and held 16 K-12 assets, including three schools under development and two student-accommodation facilities managed by higher education institutions. The group also had two K-12 assets in Dubai, United Arab Emirates. Its managed portfolio comprised 14 student-accommodation campuses with 55,487 beds under management.

The reported pro forma revenue is an accounting presentation after giving effect to the proposed acquisitions, rather than a forecast of post-closing revenue. The valuation reports used discounted cash flow and land value, as applicable, to determine enterprise value. The prospectus warns that Elevate may not achieve anticipated benefits from the K-12 asset acquisition, which could affect its business, results of operations, financial condition and cash flows.

When will the K-12 affiliate acquisition close?

Elevate expects the K-12 affiliate acquisition to close after conditions precedent in the securities purchase agreements are satisfied or waived, and within seven business days after listing and trading approval from the stock exchanges. The parties may agree another closing date. The consideration is also payable within seven business days of that approval, or on another date mutually agreed with the K-12 holding companies.

The Fiscal 2027 deployment schedule is based on Elevate’s business plan, internal estimates, financial and market conditions, competition, interest rates, exchange-rate fluctuations and commercial factors. The objects of the issue were not appraised by a bank, financial institution or independent agency. If net proceeds are not used in the stated period, Elevate says it may deploy the balance in the next fiscal year in accordance with applicable law.

Elevate may also revise the amount or timing assigned to an object, subject to applicable law, if funding needs, costs, market conditions or business requirements change. If actual deployment for an object is lower than planned, the surplus may be used for other disclosed objects, subject to the 25% individual and 35% combined limits on unidentified acquisitions, strategic initiatives and general corporate purposes. The stated acquisition allocation therefore remains subject to closing adjustments and the company’s permitted deployment decisions.

Conclusion

Elevate’s proposed IPO use would transfer 14 K-12 entities and campuses from promoter-affiliate ownership into its listed group, with Rs 1,100 crore of net proceeds assigned to the transaction. The acquisition consideration is based on Rs 1,115.71 crore of aggregate equity value, rather than Rs 1,824.62 crore of enterprise value, because debt, cash, deposits and other specified balance-sheet items are taken into account.

The next disclosed milestone is the satisfaction or waiver of conditions precedent and receipt of listing and trading approval, after which closing is expected within seven business days unless the parties agree otherwise. The final consideration, the use of Rs 15.71 crore from Elevate’s March 31, 2026 cash balance, and the eventual consolidation of the K-12 entities remain matters to watch under the six securities purchase agreements.