The “Aakash” is not the limit: BYJU’S buys Aakash for almost $1 billion.
A glimpse of BYJU’s acquisition of Aakash Educational Services Ltd (AESL).
Key points:
- BYJU’S the learning app acquires test prep major Aakash Educational Services Ltd (AESL) for $940m.
- BYJU’S valuation rises to $13 billion after the acquisition.
- Blackstone, a private equity firm and the Chaudhry Family (AESL owners) to get cash and equity stake in BYJU’S in the ratio of 70:30.
- Aakash (AESL) would run independently under BYJU’S and grow with its help.
- BYJU’S looking to raise $700 million from new and existing investors that would increase its valuation to $15 billion.
- BYJU’S aims to generate $1 billion in revenue.
BYJU’S — the country’s largest online education startup has finally secured offline test prep major Aakash Educational Services Ltd (AESL) for $940 million, in a cash-equity stake.
India’s edtech decacorn BYJU’S, which is on an acquisition spree, has made its seventh acquisition by taking over Blackstone Group backed Aakash which could be one of the biggest edtech deals in the world. In August 2020, BYJU’S acquired WhiteHatJr, a coding platform for kids for $300 million. But the deal with AESL is a game changer.
Why?
BYJU’S, the Bengaluru-based brand focuses on K-12 online lessons and test prep modules. Since COVID-19, BYJU’S has seen a striking increase in user traction because of the shutdown of schools and other educational institutes. But its rival Unacademy stole a piece of the pie, as it focused on live classes rather than pre-recorded. This made BYJU’S move to live classes as well last year. But this wasn’t enough for it to get ahead.
The company was under pressure to maintain the leadership position and expand its market presence. With schools reopening, the competitors such as Unacademy, Vedanta, etc. were catching up. BYJU’S then realized that it had to have a larger presence in the competitive test preparation market, to grow its reach and revenue.
And Aakash was the right piece of the puzzle.
India’s largest offline test prep leader Aakash Educational Services Ltd (AESL) has three avenues: Aakash Medical, Aakash IIT-JEE, Aakash Foundation (for classes 8–10). By their names, it preps students for medical, engineering and other competitive exams, even for boards. This brick-and-mortar company has 33 years of experience, with over 215 centres pan-India having a student count of more than 250,000.
In 2019, private equity firm Blackstone had picked up a 37.5% stake in AESL. This valued AESL at $500 million.
“We invested in AESL because it is one of the leading education brands in India with a professional management team. We have always believed omnichannel will be the winning model in test prep and tutoring.”
- Amit Dixit, Co-Head of Asia Acquisitions and Head of India Private Equity at Blackstone
After a lot of due diligence, the deal was sealed. It was decided that AESL would run independently under BYJU’S, and the latter would put money to boost AESL’s growth.
“Test-prep especially on the offline side has been a very different area for BYJU’S,”. “Like WhiteHat Jr and Osmo, we will also operate separately and independently, post-acquisition. I will run test prep for Think and Learn Private Ltd, the parent company of BYJU’S,”
- Aakash Chaudhry, Managing Director of AESL.
Aakash Chaudhry also added that the company will launch new types of centres that are partially online and offline, where teachers don’t have to be present physically.
Acquiring AESL is the second acquisition of BYJU’S in less than 12 months. Seventh acquisition overall.
“Our complementary strengths will enable us to build capabilities, create engaging and personalized learning programmes. The future of learning is hybrid and this union will bring together the best of offline and online learning, as we combine our expertise to create impactful experiences for students,”
- Byju Raveendran, founder and CEO of BYJU’S
Future Plans:
After raising a fresh $700 Million, BYJU’S valuation will near $15 Billion. BYJU’S says the company will look at opportunities that bring in new products and formats, market expansions or distribution opportunities. Until now, it has more than 70 million users logged in and from over 1700 cities around the country. Of these, 4.5 Million are paid users.
BYJU’S aims to reach a revenue of $1 billion in a year. With the pace of its growth, the target seems it can be achieved sooner than later. Only time will tell.
Disclaimer: The thoughts shared on this blog are independent views of the Author and the E-Cell, NIT Raipur does not necessarily encourage it.
