India’s biggest online-education start-up Byju’s has signed a deal to acquire brick-and-mortar tutoring business Aakash Educational Services for $1 billion, according to a source.
The deal will be one of the largest EdTech acquisitions in the world and is set to close in the next two or three months, the source said.
Bangalore-based Byju’s is valued at $12bn and has been on a fundraising spree as the pandemic has sent demand for its online lessons soaring. India’s second-most valuable start-up is backed by the likes of Facebook founder Mark Zuckerberg’s Chan Zuckerberg Initiative, Tiger Global Management and Bond Capital, co-founded by Silicon Valley investor Mary Meeker.
Online education has become one of the hottest investment arenas during the pandemic, attracting investors betting that a prolonged lockdown will introduce parents and kids worldwide to a burgeoning format. That is particularly true in India, where a scarcity of good teachers and quality learning material is encouraging students to try out widely accessible virtual classes. Byju’s itself has raised hundreds of millions of dollars over the past year from investors including BlackRock, Silver Lake and T. Rowe Price, while Unacademy in September secured financing in a round led by SoftBank at a $1.45bn valuation.
While online learning start-ups have thrived, offline tutoring centres have been badly hit by the pandemic, which has closed schools and tutoring centres since March last year. Blackstone-backed Aakash Educational Services runs Aakash Institute, which has over 200 brick-and-mortar centres and tutors students to gain entry into the country’s elite engineering and medical schools. Its student count is more than 250,000, according to its website.
In the deal with Byju’s, Aakash’s founders, the Chaudhry family, will exit completely, while Blackstone will swap a portion of its 37.5 per cent equity in Aakash for a stake in Byju’s, said the source. A Byju’s spokeswoman declined to comment, while emails and calls to New Delhi-based Aakash Educational Services and its chief executive Aakash Chaudhry were not answered.
Byju’s was founded by Byju Raveendran, a former teacher, who conceived the smartphone app in 2011. The app caters to students from kindergarten to the 12th grade, and has been adding more than 5 million users a month. India has about 250 million students in the K-12 grades. The app provides lessons in mathematics and science subjects through video animations and games.
More than 70 million users logged in from over 1,700 cities around the country, Byju’s said last September when it announced a fund raise. Of these, over 4.5 million are paid users. The company is looking to double its revenues to $1bn in the current financial year ending in March 2021.