Higher education is undergoing structural change globally, driven by digital disruption, financial consolidation, and shifting student expectations. Investors and operators across the globe and in India, are eyeing the Indian higher education market for its scale, reform momentum, and emergence of new-age institutions. This article explores global M&A trends in higher education, the strategic and financial drivers behind them, and how they apply to India’s evolving landscape. We also dive into the legal and regulatory nuances that shape deal-making in India.

Introduction: Why HigherEd is Getting Investor’s Attention?

The higher education sector which has been viewed as mission-driven and publicly funded, is undergoing a transformation. Once dominated by government-run institutions, higher education globally is now attracting sustained private capital. Why? Because education, especially higher education is a resilient business supported by long term demographic demand and Its revenue and cost models mirror successful infrastructure and services businesses.

Some of the defining characteristics:

Resilient Growth: HigherEd is one of the few sectors where demand is largely non-cyclical. Global enrolment in tertiary education increased from 100 million in 2000 to over 235 million in 2021, according to UNESCO.Predictable and Advance Cash Flows: Institutions often receive tuition upfront, enabling strong cash visibility and reduced working capital cycles.Capital Intensive by Nature: Setup requires heavy investments in land, buildings, labs, and digital delivery systems, which can be offset by long operational lifespans and student volume.Sustainable Operating Margins: A well-managed university can deliver 30–35% EBITDA. Key cost items include faculty (~30–35%), infrastructure maintenance (~10%), marketing (~10–15%), and rent (~5–10%).Regulatory Complexity: In several countries including India, for-profit structures for core university operations are restricted, requiring careful legal structuring.Long-Term Institutional Play: HigherEd aligns well with investor interest in long-term yield and ESG-driven portfolios due to its developmental importance.HigherEd margin profile mirrors successful infrastructure and services businesses

Investment Landscape: Global Capital Flows into HigherEd

The global higher education M&A market has experienced increased activity since 2017, with more than $12 billion coming through multiple disclosed deals from 2017 to 2023. Investment comes in many forms:

Depending on regulatory framework, PE players have used different mechanisms to invest in HigherEDEquity M&A of Institutions: PE firms like Baring, TPG, KKR, and TA Associates have backed networks such as Galileo Global Education, Adtalem Global Education, and Strategic Education Inc.Real Estate-Focused Transactions: Student housing and campus development have attracted infrastructure investors and REITs.Platform and Service Models: GUS and Kaplan have developed OPM-style platforms with shared services and distributed program delivery.

Key Trends that have driven transactions

As financial pressures and enrollment challenges mount, higher education institutions globally are increasingly turning to M&A as a strategic lever. The chart below highlights the sharp uptick in M&A activity over the past two decades nearly tripling from 11 transactions in 2001–05 to 31 in 2016–20 in the US. This trend underscores a broader shift toward consolidation as institutions seek scale, operational efficiency, and long-term sustainability.

Source: McKinsey Article on Strengthening Higher Education Outcomes

The market is shaped by several other driving trends that have led to multiple cross border and domestic strategic transactions:

Building Digital Capability: EdTech players and HigherEd incumbents have focused on increasing their digital capabilities through strategic acquisitions. Some of the transactions include — Strategic Education’s acquisition of Torrens (Australia), 2U’s acquisition of edX, and Kaplan’s integration with Purdue.Cross-Border Expansion Platforms: Players such as GUS and Galileo operates 10+ countries. These platforms have heavily focused on scaling through acquisitions and consolidating assets.Distress-Driven Consolidation: In the U.S., over 50 small private colleges have closed or merged since 2016 due to rising tuition costs, falling enrollment, and increased operating costs (Source: Huron Consulting Group).Shift Toward Career-Integrated & Outcome-Driven Education: There is growing demand for career-aligned and job-ready education. Many new age companies have come up with such courses and have shown tremendous promise. This has driven acquisitions from Incumbents. Examples include: Graham Holdings’ acquisition of Kaplan Pathways (US/UK), which expanded its global footprint in job-aligned transition programs for international students; Adecco’s acquisition of General Assembly (US), which linked tech and business bootcamps directly with workforce placement.

The Indian HigherEd Market: Resilience & Innovation Amidst Complexity

India’s higher education sector is one of the largest and most dynamic in the world, serving over 40 million students across 1,000+ universities and 45,000+ colleges. With rising aspirations among India’s youth, growing demand for job relevant skills, and a rapid shift toward digital learning, the sector is experiencing transformative pressure. Traditional models are being challenged by new-age institutions, edtech platforms, and hybrid delivery formats, all lining up to serve an increasingly outcome focused student population. Meanwhile, regulatory reforms under the National Education Policy (NEP) 2020 are opening doors for innovation, consolidation, and foreign collaboration which is creating a fertile ground for investment and M&A activity.

Key Trends:

Ripe for Consolidation: Most institutions are small, regional colleges with limited scale and operational sophistication. Investors see potential for platform roll-ups.Structural Tailwinds: Gross Enrolment Ratio (GER) rose to 28.4% in 2022 (AISHE), with a national goal of 50% by 2035 under NEP 2020. Emerging disciplines such as AI, Data Science, and Design are driving demand for new-age programs.Emergence of New-Age Models: Institutions like Master’s Union, NxtWave, and MESA School of Business are pioneering career and job-oriented certifications. They often rely on university tie-ups to give degrees.EdTech Convergence: Platforms like UpGrad, PhysicsWallah, and Masai School are pushing into higher education by acquiring traditional institutions or applying for university licenses, acknowledging the resilience and growth of HigherEd business.International Expansion:

Why Investors Find India’s HigherEd Market Attractive?

Attractive Financial Profile: Successful institutions generate ~35% EBITDA margins. Key costs include faculty salaries, infrastructure, marketing, and rent. Given tuition is often collected in advance, EBITDA is largely cash-based.Scalable Models: Core costs are semi-fixed, enabling operating leverage as enrolment grows. New delivery models allow hybrid and fully online models to scale nationally.Favourable Demographics: India will have over 140 million college-age youth by 2030. Rising income levels and career orientation make higher education a necessity.Exit Pathways: Institutional appetite for Indian higher education assets has strengthened post-NEP, driven by liberal reforms such as 100% FDI, UGC’s FHEI framework, IFSCA guidelines, and Educity models. These have opened avenues for for-profit operations and profit repatriation making investors increasingly confident about exit pathways via IPOs or secondary sales to larger funds.

Notable Transactions:

Global University Systems’ acquisition of UPES was a landmark entry into India’s regulated higher education space. By securing control through the operating company, GUS effectively executed an OPM-style model, gaining economic rights without owning the not-for-profit licenseManipal’s acquisition of Srishti Institute marked a strategic move to diversify beyond its core strengths in medicine, engineering, and management into creative and design education a fast-growing domain in India’s higher education landscapeUpGradacquired Atlas SkillTech University to deepen its presence in the formal higher education space. Atlas isa private university based in Mumbai with a strong focus on design and innovation. This move solidfies UpGrad’s vision of integrating industry-relevant education with academic rigor.

Legal Landscape: Constraints and Reform in India

India’s legal framework mandates that universities must be run by not-for-profit entities being either trusts, societies, or Section 8 companies. M&A in HigherEd can require approval from public and private governance bodies and accreditors in addition to buy-in from faculty, staff, alumni, and donors. This creates constraints for direct equity investments or commercial M&A.

Ownership Models:

Trust + OpCo Model: A university is legally operated by a trust, while a for-profit service company provides technology, curriculum, and administrative support called “ManCo” and infrastructure is provided by “PropCo”Revenue Channels: The “ManCo” & “PropCo” earns service fees from the trust for various functions. These contracts must be at arm’s length, transparent, and compliant.Revenue flow chart across different entities of a HigherEd Insitute

Recent Reforms have been more liberal: Building Investor Confidence

100% FDI: Permitted under the automatic route in education, with restrictions on commercial returns from not-for-profit universities.UGC (FHEI) 2023 Guidelines: Foreign universities in the global top 500 can establish campuses in India with full academic and administrative autonomy and can repartriate the surplus.GIFT city IFSCA Guidlines: The IFSCA governs GIFT City and allows top global universities to set up branch campuses with full autonomy. Unlike UGC-regulated models, IFSCA permits for-profit operations, and unrestricted profit repatriation. These campuses can offer the same degrees and curriculum as their home country, free from UGC or AICTE oversight. Deakin & Wollongong already opened campuses in GIFT City.Educity Navi Mumbai: A proposed special economic zone for foreign universities, enabling for-profit education delivery within a designated liberal regulatory framework.Comparing India’s Three Liberal Pathways for Foreign Universities: UGC (FHEI), IFSCA (GIFT City) & EduCity

Navigating M&A in Indian HigherEd

Unlike traditional M&A structures where control is acquired through equity ownership, in Indian higher education the same is not possible due to regulatory barriers. Most universities are operated by not-for-profit trusts or societies, which under Indian law, cannot be directly acquired or operated for profit. As a result, transactions in this space have evolved through alternative models that align with both commercial objectives and regulatory compliance:

1. ServiceCo Acquisitions: To navigate the restriction on acquiring not-for-profit educational institutions, investors often acquire or establish a for-profit “ManCo” that provides critical services to the educational trust. These services range from marketing and admissions to content development, faculty training, IT, and infrastructure management. These ManCos, while legally distinct, effectively control operational and financial levers of the academic entity.

2. Long-Term Leases and Operating Rights: Another common route is securing long-term infrastructure leases and management contracts. Here, the investor funds, owns, or leases the physical assets (e.g., campus, hostels) and enters into agreements with the trust to operate and maintain these facilities or gives them on rent. This allows the investor to monetize the physical assets (e.g., through student housing or canteen operations or through rent) while staying clear of direct involvement in academics.

3. Licensing & Content Monetization Models: EdTech and digital platforms have found another workaround by monetizing their IP, curriculum, learning platforms, assessments, analytics tools through licensing or revenue-sharing arrangements with higher education institutions. This model allows them to participate in the economics of student enrollment without direct regulatory risk. Companies like iNurture, upGrad, and Coursera (via university partnerships) leverage this model, supplying industry-relevant programs while sharing revenue per enrolled student.

4. Greenfield University Applications under New UGC Guidelines: Recent UGC initiatives such as the UGC (Institutions Deemed to be Universities) Regulations, 2023 and the Foreign Universities in GIFT City Guidelines have created fresh pathways for investor-backed institutions to set up from scratch. This “greenfield” strategy allows full operational control from day one provided the investor backs a sponsoring trust and fulfils endowment and infrastructure criteria. Notable moves include Shiv Nadar University, BITS Pilani’s expansion, and new international entrants like Deakin University setting up in GIFT City.

Conclusion: India as the Next HigherEd M&A Frontier

Globally, higher education is undergoing deep structural transformation. Digital delivery, international consolidation, and new funding models are reshaping how institutions scale and sustain themselves. India presents an even more compelling opportunity: it offers unmatched scale, an underpenetrated market, growing student aspirations, and a government that is gradually liberalizing the sector.

However, investors must navigate regulatory complexity and opt for creative structures like the Trust–OpCo model. The opening up of Educity and foreign university norms under UGC further signal a liberal shift. For global and domestic investors with long-term vision and structural know-how, the Indian higher education market is not just attractive it’s inevitable.