Byju's likely to close $800-million Aakash Educational deal by March

The edtech decacorn which is valued at about $12 billion is scouting global markets including the U.S and India to acquire many other smaller rivals which could help it scale up faster

Byju’s is on an acquisition spree, with the edtech decacorn seeking to close the deal to acquire exam preparation firm Aakash Educational Services by March.
 
The deal, valued at $700-800 million, would be the biggest in the education space once closed, said sources.
 
“Due diligence is going on,” said a person in the know. “Negotiations are on between Byju’s and Aakash’s founders as they want to remain invested through some stake, and also run it independently.”
 
Byju’s declined to comment. According to sources, the deal is being structured in the form of cash and equity. People in the know said Byju’s is in talks with new and existing investors, mainly based in the US,  to raise fresh capital of $500 million.
 
Aakash Educational Services (AESL) is the biggest education organisation in India. It provides comprehensive test preparatory services for students preparing for medical and engineering entrance examinations. It also provides services related to school and board exams and competitive exams such as NTSE, KVPY, and Olympiads.
 
Aakash has over 33 years of operational experience in the test preparatory industry with a pan India network of over 205 Aakash Centers (including franchisee) and a student count of more than 250,000. The institute clocks an annual turnover of Rs 1,200 crore. In 2019, PE firm Blackstone picked up 37.5 per cent stake in AESL, valuing the company at $500 million.

 
Byju’s, valued at $12 billion, has been on a fundraising spree since 2020. The pandemic helped it become a decacorn. It has raised a total of $2.1 billion.
 
Besides the existing capital, the fresh fundraising of $500 million is expected to help Byju’s make other acquisitions.
 
There is a need for the firm to justify the $12-billion valuation and scale up revenues rapidly, according to experts.
 
To achieve that, the firm has taken an inorganic route where it is in talks to acquire many edtech firms in India and global market. It was in talks to acquire smaller rivals such as Toppr in a $150 million deal and education firm Scholr, according to the sources.
 
Last year in August, Byju’s acquired Mumbai based ed-tech start-up, WhiteHat Jr, which teaches coding to children for $300 million.
 
The country’s $180-billion education sector has gone online to adapt to the new reality, leading to opportunities for edtech firms, including Unacademy, Vedantu, and Byju’s. Byju’s had almost doubled its revenue from Rs 1,430 crore to Rs 2,800 crore in FY20. Today, the app has over 70 million registered students and 4.5 million annual paid subscriptions.