Kumar Birla buys stake in US e-learning co
Our Mumbai Bureau -ET
15 DECEMBER
'e' is everywhere. Even the commodity-focused AV Birla Group has been touched by the e-fever.
Making its first serious foray into the Internet arena, the Rs 20,000-crore group ? in its maiden acquisition in the US ? has taken control of LearningByte International (LBI), a Minneapolis-based 'e-learning' company. The group has bought a stake in the company for an undisclosed sum through a newly-floated subsidiary in the United States, New Millennium Investments, using funds from its south-east Asian business.
Sources in the group claim LBI is valued at over $200m. The company specialises in designing and administering corporate training packages over the Web.When contacted, Birla group chairman Kumar Mangalam Birla confirmed that the group had gained management control of LearningByte, but declined to disclose the extent of equity bought.
"The AV Birla group is looking to increasingly invest in technology-related businesses and those involving intellectual capital," he said.
With the Birla group in control, LBI plans to go in for a Nasdaq listing in the next couple of years, officials said. LBI will take four directors from the AV Birla group onto its board.
These include GK Tulsian, executive president, Grasim Industries, Jagdish N Sheth, a US-based management professor, and Bharat K Singh, senior group president (corporate strategy & business development), Birla Management Centre. Rajiv Tandon, one of the original promoters, will be president and CEO of LBI.
LBI was voted one of the 50 fastest-growing companies in the US in '98 and is looking at a sales growth in the region of 400-500 per cent every year. The company, at present, has a turnover of $5.5m which is expected to grow to $16.5m by next year. LBI has also increased its stake in its Indian subsidiary - LearningByte India - to 100 per cent by buying out the 24 per cent stake of other shareholders in the company.
LearningByte India has three offices in India - at Hyderabad, Bangalore and Pilani. LBI's client base includes National Car Rental System, part of the General Motors group, Northwest Airlines, Banc One, Dr Reddy's Lab, IBM, Dell and Novell among others.
Mr Tandon said, the company would use the capital infusion to accelerate its growth in the expanding e-learning market, terming the development "exciting". The funds will enable the company to up sales and operations, broaden offerings and allow the expansion of LBI's Java/HTML-based development architecture and tools, he said.
He said that the investment was "substantial" and sufficient to take LBI to the point of an initial public offering.
The e-learning business is growing at a compounded annual growth rate of 40 per cent and is expected to represent 55 per cent of all training by the year 2002. The corporate training business where LBI specialises, is alone expected to grow by 95 per cent to $5.5bn by the year 2002. It stands at just $200m today. The e-learning business is expected to show a steady rise over the next 30 months and will then take off.
In 1990, it cost $300 in the US for an hour of instruction using the traditional classroom for delivery of learning. By 2005, that same hour will cost 3 cents, LBI says.
LBI at present has seven offices in the US at Minneapolis, Detroit, Seattle, Atlanta, Austin, New York and Los Angeles, and has 140 employees in the US and India.
LBI's core competencies are consulting, content development and authoring tools. The company helps organisations better understand their learning needs and the use of technology to help solve those needs. Content development services provide a broad range of e-learning solutions from complex, custom simulation and complete courses to single 'LearningBytes' of information and online documentation.
The company also offers its Java/HTML-based authoring tools that enable organisations to create and deliver their own e-learning solutions. |
