Monday, December 13, 2010

Great Lakes stake sale

Bala Balachandran, founder of Great Lakes School of Management, is in talks to sell 51% of his stake to Tata Foundation and Pirosha Godrej Foundation, BS reports.
“I have 90 per cent stake in my institute. I have decided to give the ownership to somebody who can give me some money to expand. I may offload as much as 51 per cent. The valuation of the institute would be around Rs 220 crore,” Balachandran told Business Standard on the sidelines of an event in Mumbai.
Balachandran would make a cool over Rs 110 crore on his stake sale. Not bad for an investor in a school that has been around for less than 10 years. What was his original investment, I wonder. The money that Balachandran makes would go into his pocket because it arises from sale of his equity, not through additional issue of equity. Presumably, for the expansion, the new investors will provide the additional funding.

Is the original promoter in an educational institution allowed to exit this way, possibly at a profit? I would like to know. The BS report states:
Great Lakes was formed in 2002 as a Section-25 company. Section-25 companies are those formed for the purpose of promoting commerce, art, science, religion, charity or any other deemed “useful object” and whose profits are used solely to further its stated objectives.
Balachandran will be taking over the Mumbai Business School, which will be named Great Lakes, Mumbai. Great Lakes is also venturing into Gurgaon and Orissa. In Gurgaon, it has bought land. In Orissa, the government has given it 100 acres of land on a 99 year lease. I have said this before: we need to review the policy on making government land available to private parties at less than market prices.

13 comments:

Anonymous said...

One had expected Prof Bala to create an ISB type of success story through GLIM. Unfortunately he seems to be going the ICFAI way.

amarharish said...

@Anon: Each institution caters to a specific set of audience and has its own reach and expansion strategies.

w.r.t Prof. Bala, I have myself attended his classes. He is a visionary and a treasure-trove of knowledge.

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Anonymous said...

Its easy to write a comment saying somebody is going this way or the other. But the fact is Uncle Bala is a true visionary and a leader. And he has always tried to create a world class educational institutes so that knowledge seekers don't have to always go abroad for the same. And we are already seeing the benefits of this world class education in our career.

We see these benefits are being extended to larger part of this country with this expansion.

Cheers uncle bala!

Brijesh said...

So MR.TT Ram Mohan, what exactly are you whining about - Great Lakes valuation despite the small time it has been around, the rate at which a Great Lakes is growing, Successful execution of Prof Balachandran's vision that India and the world has seen being on more than one front, your own sorry state of being a no one or your sole dependence of news and knowledge of the world around on Business Standard.

After achieving what he has and being where he is, Prof Balachandran had no reason to work for making affordable education accessible to Indian students at large. Yet he is focussed on his dream.

And that, Mr.TT Ram Mohan is what separates the legend that is Prof Balachandran from whiners like your good self.

Grow up and see the world around, there is a lot of positive contribution you can make instead of such sadist attempts at bringing down someone who is beyond your reach.

Get Well soon.

Kunal Banthia said...

This article is biased...offloading stake is a very common way to raise capital inorder to fund expansions. This is being portrayed as if Prof Bala is pocketing money through this way which is a baseless claim. Infact, he is offloading the stake to reputed institutions who have been involved with Great Lakes for quite some time rather than to some profit-orientated institutions.

Secondly, setting up new campuses is the only way B-Schools can expand as quality B-Schools can take in only a limited capacity without sacrificing on the quality (The maximum an IIM has is around 400 students). This is precisely the reason why we now have so many IIMs sprawling across the country, infact even ISB is opening up a new campus in Mohali.

Finally, setting up Great Lakes Institutes in Metro cities is a great way to leverage current brand equity and further increase brand exposure and definitely the way forward for Great Lakes as apart from a section of the MBA population and a finite set of companies, not many are aware of Great Lakes and its world-class offerings. Hence I personally feel, its a great strategy for GLIM in the long run.

Here is an unbiased article on the same: http://www.pagalguy.com/2010/12/great-lakes-to-start-university-in-orissa-another-b-school-in-delhi/

Champ said...

Well, long live Dr. Bala and his vision. After having incubated the concept of 1-year MBA in India by co-founding ISB and then launching Great Lakes successfully, he is extending his vision of a 1-year MBA with quality education on an all India basis, which at his age is truly commendable. I am seeing this as a truly game changing move in the Indian Management education industry.

All I want to say to Mr. TT Ram Mohan is that, most critics always try and pinpoint folks who are passionate about giving something back to their country rather than bask in the glory of such visionaries.

Dr. Bala is a man who should be idolized for transforming the future of several youth in India with his leadership and vision.

So Mr. TT Mohan, I would appreciate, if you could add some more value by exposing the big scams that are plaguing our country instead of pointing fingers at a living legend in the Indian education industry.

Anonymous said...

I am surprised at the venom with which supporters of Prof Bala are attacking TTR on this post. Guys if you are really so passionate, why don't you counter the points made by TTR instead of making personal attacks? Is it something Prof Bala would approve of? Why don't you respond by saying why Great Lakes is not in the global top 15 like ISB or even among India's most sought after schools? Why doesn't it have a large core faculty or any research strength? Or, to come to TTR's main point, why Prof Bala made profits from selling stakes and is being given land at cheap prices? Please respond rationally with logic and not like a slanging match.

Santosh Sali said...

Surprised to see so many lovers of Mr. Bala , but you didn't get the point.

TTR has a very valid point, if the land is given on the premise of Section-15 , profits shall go back to Institute and not in the Pockets of Mr. Bala.

TTR had pointed this only & he did not commented on the person Bala - his abilities or skills in teaching.

Anonymous said...

Issue is very clear. Uncle Bala is a great teacher no doubt. Visionary- No doubt. But, here the issue is public vs private money. The land was given at a dirt cheap rate by the Tamilnadu government for educational cause and not for individual profiteering how much ever hard he has branded and built it well. This is purely a valuation game. None of us would have commented had he sold his stake when he was operating out of rented Saidapet campus in chennai. Government must henceforth have PPP model for such projects with clear exit clauses

Anonymous said...

What else you can expect from a great man who charged two different companies for his same single flight trip from USA to India, unfortunately, not knowing that the CFOs of both the companies are very good friends !! !!

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