Education has consistently been recognised as the cornerstone of development for any country or region, and one of the highest return rewarding development activities. Education outcome is influenced by a number of factors, infrastructure being one of them.
School infrastructure, its design, quality and day to day management is significant in enabling school system to deliver improved education outcomes. It broadly encompasses land and building, quality of facilities and the overall design.
The development of quality school infrastructure requires significant capital investment, which has increased the overall cost of construction of the school.
Huge cost of construction has burdened the school operators, who have limited options for financing available, which primarily include debt.
The financing options available in market come at a high cost with a capital rotation cycle of more than 5 years, which slows down the growth of the school. The regular repayments puts pressure on the school cash flows, leaving low or no surplus cash available for further growth. The reduced cash flows also impacts the valuation of the school.
Cerestra recognises the need to develop quality infrastructure across learning in India. It will play an important part in providing infrastructure support to schools by taking up the infrastructure investment through monetisation of existing facilities of school, thereby unlocking significant capital to fund future growth.
Cerestra model provides an efficient non amortising alternative to debt at lower servicing cost by effectively becoming a landlord earning fixed rent rather than a lender.
With Cerestras investment, the capital rotation cycle is reduced to 2 years, complimenting school growth. Further it reduces the pressure on cash flows leading to more efficient use of capital in growth phase, where it is most required.
Cerestra believes that the learning environment has a profound impact on the development of the learning community and teachers and students can use high quality infrastructure and spaces as learning material for impactful learning. Hence it provides an efficient way to school owners to upgrade their infrastructure and facilities while not compromising on the school operations.
In essence, the Cerestra model creates a win-win partnership where the school operator focuses on what he knows the best, to run the school to the highest standards of academic excellence” and Cerestra takes up the entire responsibility of providing quality infrastructure” together creating the global citizen of tomorrow.
The author is Jasmeet Chhabra, Managing Partner of Cerestra Advisors Ltd.
Also read: NEP 2020: SCHOOL EDUCATION | ECCE: Infrastructure