How would you take a university public? It has 12,000 students paying Rs 3 lakh a year at a 30% operating margin. Using a sector EV to EBITDA of 18 times, set the valuation, the split between new and existing shares, and the price per share.

On 18 times EBITDA of Rs 108 crore, Vidyavan is worth about Rs 1,944 crore, or Rs 1,880 crore of equity, Rs 94 a share; offer it at about Rs 80, a 15% discount. Issue Rs 240 crore of new shares to fund the campus and let the private equity fund sell Rs 260 crore, a 27% public float. First confirm the university can legally sit inside a listed company.

Start with the question most candidates skip, because it decides the structure. In many places, India included, a degree-granting institution must be run by a not-for-profit trust or society, so investors cannot simply own the university. Listed education groups usually own a company that holds the campus and provides services, such as buildings, technology and management, to the institution under a long-term contract, and earn fees for it. Confirm the current rules with counsel before anything else. Then the usual listing tests: audited accounts for several years, independent directors, and related-party dealings with the founding family cleaned up.

A family deciding what to charge for its house starts with what similar houses fetch, then adjusts for the leaking roof. Fees are 12,000 x Rs 3 lakh, Rs 360 crore; at a 30% margin EBITDA is Rs 108 crore; 18 times that is Rs 1,944 crore of enterprise value, and after Rs 64 crore of net debt, Rs 1,880 crore of equity, Rs 94 a share. Then test the multiple. That is Rs 16 lakh of value per seat, so a peer at 18 times must have similar growth. One campus has a ceiling: growth comes from fee increases, which regulators may cap, and from new campuses, which need capital. A single-campus university deserves to sit at or below the peer multiple, not above it.

New listings are usually priced below where the bankers think they will trade, because buyers are taking a chance on a company with no trading record. A discount of about 15% takes Rs 94 to about Rs 80 a share, an offer value of Rs 1,600 crore before the new money. The discount is a cost to the sellers: if the shares later trade at fair value, about Rs 92 after the new cash arrives, buyers make about 15% and the private equity fund has sold its shares that much too cheap. The bookbuild, where large investors bid, sets the final price inside a band.

Match each part to a purpose. The fresh issue raises exactly what the second campus needs, Rs 240 crore, 3 crore new shares at Rs 80; the offer for sale lets the private equity fund sell Rs 260 crore, 3.25 crore of its 6 crore shares. After listing there are 23 crore shares, worth Rs 1,840 crore at the offer price, and 27.2% are in public hands. Check that float against the current minimum public shareholding rule. Investors read the split as a signal: an issue that is mostly shares sold by insiders tells them the owners are cashing out, while new money tied to a visible campus plan tells them the owners are building.

Close with the risks an investor would price. Enrolment and fee regulation are the two numbers that move this valuation, so the prospectus must show utilisation, fee history and any cap. A second campus that fills slowly would dilute margins for years, and a dispute with the trust that runs the university would threaten the service contract that all the value rests on.