Highlights:
- The cash and stock deal were valued at approximately $1 billion (nearly $900 million).
- According to Byju Raveendran, “As we merge our expertise to develop impactful experiences for students, the union will put together the best of offline and online learning.”
- Despite the acquisition by Byju’s, Aakash Educational Services will continue to operate independently, led by founders J.C. Chaudhry and Aakash Chaudhry.
BYJU’s, an Indian edtech company, announced the acquisition of education institution Aakash Educational Service Ltd (AESL) on Monday, as it looks to expand its test prep business and add omni-channel capabilities to both entities.
According to two people with direct knowledge of the merger talks, the cash and stock deal was closed at nearly $1 billion (more than $900 million) last week, making it one of the most expensive deals in India’s expanding edtech space.
Following the acquisition with Byju’s, Aakash Educational Institute will function independently, with founders J.C. Chaudhry and Aakash Chaudhry continuing to lead the company.
BYJU’s efforts to strengthen its test prep game as competition heats up are reflected in this acquisition. Last year, competitor Unacademy made nearly six acquisitions in the test prep space alone. With Amazon Academy, the internet giant Amazon India entered the test preparation market in 2020.
In addition, Aakash’s test-prep pedagogy will be integrated with BYJU’s content and technology capabilities.
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In an interview with one of the leading news channels, Aakash Chaudhry, managing director of AESL, said, “The aim of the collaboration is for students to be able to learn anywhere, at any time, and via any preferred delivery channel.” He further explained, “While we build a larger ecosystem with BYJUs, the Aakash company will continue to operate as it is, as we extend our physical classroom centres and go deeper into tier-II and tier-III locations.”
Aakash currently operates close to 200 physical learning centres in 130 cities across the country, serving approximately 1.5 lakh students. According to Chaudhry, 2.5 million students take medical and IIT exams each year, creating a market opportunity.
Aakash will be able to open more centres as a result of the acquisition, while also reaching new students via a hybrid online-offline approach.
Following the integration, BYJU’S will make additional investments to help Aakash expand faster. BYJU’s, on the other hand, refused to comment on the overall amount of money planned to be invested in the test preparatory service provider.
“For the test prep segment, a blended hybrid model of online and offline is really scaling well in international markets like China. Furthermore, due to the patterns developed by students over the last year, much of learning has shifted online. As a result, students can visit offline centres on weekends for direct teacher interactions and group preparations, which are crucial for test preparation. Byju Raveendran, founder and CEO of BYJU’’s further talking about the deal said, “However, predicting what percentage will be offline versus online will be difficult.”
According to Raveendran, the deal took six to seven months to close.
In 2019, Blackstone reportedly paid Rs1,350 crore for a 37.5 percent stake in Aakash Educational Services, valuing the company at over $500 million. The partnership was established to help Aakash expand its online education services.
BYJU raised nearly $460 million as part of its ongoing Series F funding earlier this month to finance the acquisition of Aakash, which is valued at over $13 billion. The edtech behemoth, which raised more than $1.25 billion in 2020 alone, is also looking for more funding and is considering other education-related acquisitions.
According to data from Venture Intelligence, Indian edtech companies raised $2.1 billion in 2020, the highest among all sectors, compared to $426 million in 2019.
