Byju’s, the world’s most valued edtech startup, seems to be working on its first mega-acquisition of 2021. The Bengaluru-based firm has signed a deal to acquire brick and mortar test prep company Aakash Educational Services for USD 1 billion, a Bloomberg report said late Tuesday, citing sources.
The deal, which is set to close in the next two or three months, will be one of the largest edtech acquisitions in the world, the report added.
Founded in 1988 by J C Chaudhry, Aakash Educational Services, or Aakash Institute as it is commonly known, is one of the leading coaching institutes in India for medical and engineering exam preparations. By 2014, the company had established over 100 centers that catered to 100,000 students. In 2016, the company made inroads in online education by launching digital e-learning programs. It partnered with private equity giant Blackstone to further invest in its student offerings in 2019.
However, 2020 was a disastrous year for offline tutoring institutes and coaching centers due to the lockdown and traveling restrictions owing to the pandemic. Meanwhile, online education companies thrived as millions of home-bound students flocked to these platforms to keep up with their studies.
The edtech sector saw investors pumping in about USD 2.22 billion in 2020 alone, compared to USD 553 million in 2019, according to a recent report by Indian Private Equity and Venture Capital Association (IVCA) and PGA Labs. Overall, 92 players received funding in 2020, of which 61 companies received seed funding.
Byju’s, the USD 12 billion-edtech giant has specifically been on a fundraising spree since last year. In 2020, the company raised over a billion dollars from existing and new investors like Tiger Global, General Atlantic, DST Global, Owl Ventures, Bond, Silver Lake Capital, and Sands Capital, among others. To date, it has attracted a total of USD 2.32 billion from marquee global investors.
For Aakash Institute, which claims to have over 200 centers at present and a student count of 250,000, the deal will mean an exit for its founders. Blackstone, on its part, will swap a portion of its 37.5% equity in Aakash for Byju’s stake, the Bloomberg report said.
Nine-year-old Byju’s primarily caters to students from kindergarten to the 12th grade and claims to have over 4.5 million paid users. The company is reportedly inching closer to clocking USD 1 billion in revenues by March-end.