Byju’s acquires Aakash Educational Services for nearly $1 billion

Baiju’s, which is currently valued at $13 billion, after last year’s fund raising of $1 billion, is reported to have paid close to $1 billion (about $600 million in cash and the rest in stock) for the acquisition which is one of the largest in the edtech space.

Akash, which trains students preparing to qualify for top engineering and medical colleges, is backed by private equity major Blackstone. It owns and operates more than 200 physical tutoring centres across the country. 

It was the pandemic that forced Akash and Baiju’s to explore the possibilities of a merger. Akash, which runs physical tutoring centres found coaching centres found the going tough as the pandemic raged and government imposed severe restrictions on educational institutions and coaching centres across the country. And, with the students preferring online coaching, there was no other option for Akash than exploring ways to go online.

Aakash and Byju’s, which started exploring a deal six-seven months ago, declined to give details of the financial aspects of the deal.

Reports citing Aakash Chaudhry, managing director and co-promoter of Aakash Educational, said the two firms joining forces will offer “very substantial and value-additive services to students.” 

The leadership at Aakash Educational will stay with the firm after the acquisition.

“The acquisition will enable the two entities to build the largest omni-channel for students in India, he said. “Students who have wanted to access physical classrooms have gotten that from us. And those who wanted to access content and learning online has been served by Byju’s. Together, we will leverage the physical location and technology and online learning and offer students that is unique,” he said.

Byju’s, which prepares students pursuing undergraduate and graduate-level courses, has a growing user base of over 80 million, including 5.5 million paying subscribers. It generated revenue of over $100 million in the US last year.

The startup, which is also backed by Lightspeed Ventures and Naspers, has also attempted to grow inorganically through acquisitions in recent years. In 2019, it acquired US-based Osmo for $120 million, and last year, it bought kids-focused coding platform WhiteHat Jr for $300 million.

Raveendran said the startup is looking to acquire more firms, including overseas. Byju’s is reported to be in talks with California-headquartered startup ‘Epic’ worth more than $300 million.

The acquisition of Aakash will help Byju’s gain more brand recognition and reach more students as organic growth slows.

Ernst & Young advised the firms on the transaction.