BYJU’s acquires Aakash Educational Services in about a billion-dollar deal

BYJU’s acquires Aakash Educational Services in about a billion-dollar deal
on Apr 05, 2021

Indian edtech major BYJU’s on Monday confirmed the acquisition of education institution Aakash Educational Service Ltd (AESL), as it looks to double down on its presence in the test prep segment, and further add omni-channel capabilities to both entities. The cash and stock deal was closed at almost $1 billion (more than $900 million) last week, making it one of the most expensive deals in India’s burgeoning edtech space, according to two people with direct knowledge of the merger talks. Aakash Educational Services will function independently post the acquisition, with founders J.C. Chaudhry and Aakash Chaudhry, continuing to lead the entity. The acquisition marks BYJU’s efforts to bolster its play in the test prep space as competition heats up. Rival Unacademy made close to six acquisitions last year in the test prep space alone. 2020 also marked the entry of internet giant Amazon India in the test preparation segment with Amazon Academy. Further, Aakash’s pedagogy in the test-prep segment will see an integration with BYJU’S content and tech capabilities. “The whole idea of the partnership is to enable students to learn anywhere, anytime, and through any preferred delivery channel. While we put together a larger ecosystem with BYJUs, the Aakash business will continue to run as it is, as we expand our physical classroom centres and go deeper into tier-II and tier-III locations, said Aakash Chaudhry, managing director, AESL, in an interaction with Mint. At present, Aakash has close to 200 physical learning centres, across 130 cities in the country, which serve about 1.5 lakh students. According to Chaudhry, the market opportunity sits at 2.5 million students writing medical and IIT exams every year. The acquisition will allow Aakash to open more centres, while targeting new students through a hybrid approach of online and offline. Post integration, BYJU’S will make further investments to accelerate Aakash’s growth. However, BYJU’s declined to comment on the total value of investment expected to be made in the test preparatory service provider. “What is really scaling well in international markets such as China for the test prep segment is a blended hybrid model of online and offline. Further, a lot of learning has moved online due to the habits formed by pupils over the last one year. So, students might go to offline centres for direct teacher interactions over weekends and undertake group preparations, which are critical for the test preps. But what percentage will be offline versus online will be difficult to predict, Byju Raveendran, founder, and chief executive of BYJU’s told Mint. According to Raveendran, the deal was closed over a timeline of six to seven months. In 2019, Blackstone reportedly picked up 37.5% stake in Aakash Educational Services, for Rs1,350 crore, valuing the institution at over $500 million. The partnership was to further bolster Aakash’s online education play. Earlier this month, BYJU’s raised close to $460 million as a part of its ongoing Series F funding to fund the acquisition of Aakash, valuing the company at over $13 billion. The edtech major, which raised more than $1.25 billion in 2020 alone continues to be in the market for additional funding and is eyeing other acquisitions in the education space. With sharp focus on consolidation, Indian edtech companies raised $2.1 billion in 2020, the highest among all sectors, against $426 million in 2019, according to data from Venture Intelligence. Source: livemint