Education-focused non-banking financial company Varthana Finance has secured ₹159 crore in a new debt financing round. The funding comes via non-convertible debentures (NCDs) issued to institutional investors. Proceeds will support Varthana’s mission to expand lending to affordable private schools and student borrowers across India.
Table of Contents
Addressing India’s Education Financing Gap
Founded in 2013 by Steve Hardgrave and Brajesh Mishra, Varthana focuses on providing loans to low- and middle-income private schools and students. It enables these under-resourced institutions to invest in infrastructure, like classrooms, labs, and IT facilities, and helps students pursue higher education and vocational training
The company currently operates in over 40 cities across 15–17 states, having financed more than 11,000 schools and disbursed more than 75,000 loans to date.
Strong Historical Funding Momentum
Previously, Varthana has raised sizeable debt rounds:
- ₹120 crore from BlueOrchard’s Microfinance Fund in December 2024.
- ₹75 crore via NCDs in April 2025, co-led by OfBusiness and Oxyzo, with participation from Ambium and IKF Finance.
Its loan book grew approximately 48% YoY, from around ₹1,280 crore in FY24 to ₹1,896 crore by FY25.
₹159 Crore Funding: Details & Purpose
This latest tranche of ₹159 crore debt strengthens the NBFC’s capital base. The funds will be used to:
- Increase the school loan book by financing storefront improvements, infrastructure expansion, and smart classroom adoption.
- Grow student financing for vocational high-value education in Tier II and III cities.
- Enhance geographical reach, penetrating deeper into underserved regions across states.
Financial Trends & Health
According to FY24’s annual report:
- Revenue from operations surged from ₹187 crore in FY23 to ₹284 crore—an impressive 52% jump.
- EBITDA improved from ₹74 crore to ₹142 crore in FY24.
- Net profit stood at ₹31 crore, reflecting consistent profitable performance.
These trends highlight Varthana’s ability to turn revenue growth into healthier margins.
Leadership Insight
Steve Hardgrave, Co-founder & CEO, commented:
“This debt round reinforces our commitment to enable better educational outcomes. It gives us liquidity to scale our lending to schools and students in smaller towns.”
Market Opportunity & Competitive Landscape
India’s private education finance market is vast, with over 70–85% of school enrollment in the low-cost segment demanding better facilities and quality learning.
With India’s school financing market projected to grow, NBFCs like Varthana have a significant role.
Competitors include larger NBFCs like Tata Capital and Mahindra Finance, but Varthana’s specialisation in education, data-driven loan underwriting, and deep rural penetration sets it apart.
Strategic Expansion Roadmap
Varthana’s plans include:
- Loan book target: ₹2,800 crore by FY26, building on prior 48% growth
- Scaling branches: Expanding beyond 40 cities to deeper district-level coverage.
- Product innovation: Launching new student loan products for skill development and degree courses.
- Capital mix optimisation: Balancing debt with a planned ₹300–350 crore equity raise expected in late FY26.
Supporting Infrastructure & Rating
Varthana holds a CRISIL BBB (Stable) rating and adheres to RBI NBFC norms. It is also witnessing improved borrowing costs with incremental funding sourced from domestic and international channels.
ESG and Social Impact
Operating with a clear social mission, Varthana aligns investment with educational inclusion. It offers collateral-free loans with flexible terms designed to support smaller schools and low-income students. This impact-led model appeals to institutional and impact-driven investors.
Read: Best Business Loans in India
Outlook & Next Milestones
- Use of Funds: Immediate scaling of loan disbursements across schools and students.
- Branch Network: Expansion to over 50 districts in the next 12 months.
- Equity Round: Planning to raise ₹300–350 crore in FY26 via equity for stable growth.
- Loan Book Growth: Targeting ₹2,800 crore AUM by March 2026.
Final Take
Varthana’s new ₹159 crore debt infusion reinforces its strategy to finance the backbone of affordable private education in India. With strong financials, impactful lending, and a clear roadmap, the NBFC is well-backed for a major growth phase in both school and student financing. As education continues to evolve in India, Varthana remains a pivotal enabler in transforming access and outcomes.
Discover more from NextWhatBusiness
Subscribe to get the latest posts sent to your email.
