Edtech company Byju’s on Monday confirmed the acquisition of education institution Aakash Educational Services Ltd (AESL), as it looks to boost its presence in the test preparation segment and add omnichannel capabilities to both entities.
The cash-and-stock deal was closed at almost $1 billion 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.
AESL will function independently post the acquisition, with founders J.C. Chaudhry and Aakash Chaudhry continuing to lead the entity.
The acquisition points to Byju’s efforts to bolster its presence in the test prep space as competition heats up. Last year, rival Unacademy made close to six acquisitions in test prep space, while Amazon India made an entry in the segment with Amazon Academy.
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 Byju’s, the Aakash business will continue to run as it is, as we expand our physical classroom centres and go deeper into tier-2 and tier-3 locations,” said Aakash Chaudhry, managing director, AESL, in an interaction with Mint.
Aakash has close to 200 physical learning centres across 130 cities, which serve about 150,000 students—a small part of what Chaudhry estimates to be a market comprising of 2.5 million students writing medical and IIT entrance examinations every year.
The acquisition will allow Aakash to open more centres and target new students through a hybrid of online and offline teaching. After integration, Byju’s will make further investments to accelerate Aakash’s grow
However, Byju’s declined to comment on the total value of investment expected to be made in the unit.
“What is really scaling well in international markets like 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 year. So, students might go to offline centres for direct teacher interactions over weekends and undertake group preparations, which are critical for test preps. But what percentage will be offline versus online will be difficult to predict,” Byju Raveendran, founder and CEO of Byju’s, told Mint.
In 2019, Blackstone reportedly picked up a 37.5% stake in Aakash for ₹1,350 crore, valuing the company at more than $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. Byju’s, 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 a sharp focus on consolidation, Indian edtech firms raised $2.1 billion in 2020, the highest among all sectors, against $426 million in 2019, according to data from Venture Intelligence.
