India's leading edtech startup Byju's is reportedly acquiring test preparatory service provider Aakash Educational Services Ltd. for $1 billion, or nearly Rs. 7,300 crore, according to a report by Bloomberg.
The deal is expected to materialise in the next two or three months, and would emerge as one of the largest edtech acquisitions in the world.
The demand for online teaching has seen a meteoric rise during the pandemic, pushing Byju's towards becoming a decacorn, cross $10.5 bn valuation. Byju's is currently valued at $12 billion, making it India's second-most valuable startup.
It is backed by Tiger Global Management and Bond Capital, co-founded by Silicon Valley investor Mary Meeker and Facebook founder Mark Zuckerberg’s Chan Zuckerberg Initiative. Last year, Byju's acquired Mumbai-based coding provider WhiteHat Jr for roughly Rs 2,246 crores.
Aakash Educational Services runs Aakash Institute, which has over 200 centres across the country and provides test prep services for medical and engineering students for entrance exams. It is backed by the Blackstone Group.
Offline tutoring has waned during the pandemic, as schools and tutoring centres closed shutters since March last year.
According to reports, founders of Aakash Educational Services would leave the company after the acquisition. Its investor Blackstone will swap its 37.5 per cent stake for a similar share in Byju's.
From March to September last year, over 20 million students had started using Byju's to learn for free. The app then recorded 64 million registered users and 4.2 million annual paid subscriptions. The edtech giant doubled its revenue from Rs 1,430 crores to Rs 2,800 crores the last fiscal year.
Bangalore-based Byju's was founded by Byju Raveendran in 2011, who conceptualised the smartphone application to cater to India's 250 million students across age groups. The app provides video lessons in maths and science for students from kindergarten to the 12th grade, and has reportedly been adding over 5 million users a month.
The edtech market in India stood at $735 million in 2019. It is expected to increase to $3.5 billion by 2022, according to a recent report.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine