The deal worth $1 billion would open the doors for India's largest online education startup into mortal and brick coaching centres for medical and engineering entrance tests
India's largest online education startup Byju's is in the process of acquiring Aakash Education Services Ltd. A deal worth $1 billion, touted to be world's largest ed-tech acquisition is understood to have been signed between them and should close in the next two or three months.
Aakash Educational Services Ltd runs Aakash Institute is India's leading coaching centre to prepare students for medical and engineering entrance examinations at its over 200 centres spread across the country. It claims to have over 2.5 lakh students currently enrolled with it.
The offline tutorial centres like Aakash have suffered badly following the outbreak of Covic-19 outbreak and the subsequent ban on classroom teachings. At the same time, online education business like the Byju's has witnessed an unprecedented boom with the focus shifting to online coaching.
The Bengaluru-based Byju's is estimated to be worth $12 billion and has of late been on a fundraising spree to meet the growing demand for online classes. Founded by a former teacher Byju Raveendran, Byju's imparts coaching through the smartphone-based app. Once the acquisition of Aakash is completed, it would be Byju's maiden foray on offline education system.
The takeover would also extend Byju's existing reach since so far it has been concentrating and catering to students from kindergarten to Class XII. The company claims that post-pandemic, it has been adding nearly 5 lakh new users every month. It imparts education in science and maths through video animation and games. The company is currently working towards doubling its revenue to hit $1 billion (Rs 730 crore approximately) in the financial year 2020-2021. After the amalgamation of the Aakash Institute, Byju's would be able to enter the lucrative market of medical and engineering preparation education stream as well, both through online and offline classes.
Aakash was founded by J.C. Chaudhary who himself was a teacher in 1988 and has witnessed unprecedented growth over the years to get rated among India's leading coaching centres for medical and engineering entrance examinations. It is backed by the Blackstone Group, a listed entity in the New York Stock Exchange. Blackstone owns the minority 37.5 per cent stake in Aakash.
According to details of the deal which are coming out from unofficial sources, Blackstone would swap a portion of its 37.5 per cent equity in Aakash for Byju's stake, while the family of its CEO Aakash Chaudhary would completely exit from the Aakash Educational Services.