India’s biggest online-education startup Byju’s has signed a deal to acquire brick & mortar test prep leader Aakash Educational Services Ltd. for $1 billion, according to a person with knowledge of the talks.
The deal for what will be one of the largest edtech acquisitions in the world should close in the next two or three months, said the person, who didn’t want to be identified as the information is private.
Bangalore-headquartered Byju’s is valued at $12 billion and has been on a fund-raising spree as the pandemic has sent demand for its online lessons soaring. India’s second-most valuable startup 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.
A Byju’s spokeswoman declined to comment, while emails and calls to New Delhi-based Aakash Educational Services and its Chief Executive Officer Aakash Chaudhry did not elicit a response.
Blackstone Group-backed Aakash Educational Services runs Aakash Institute, which has over 200 brick and mortar centers and tutors students to gain entry into the country’s elite engineering and medical schools. Its student count is over 250,000, according to its website.
While online learning startups have thrived, offline tutoring centers have been badly hit by the pandemic, which has closed schools and tutoring centers since March last year.
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% equity in Aakash for Byju’s stake, said the person.
Byju’s was founded by Byju Raveendran, a former teacher and the son of educators, who conceived the smartphone app in 2011. The app caters to students from kindergarten to the 12th grade, and has been adding over 5 million users a month. India has about 250 million students in the K-12 grades. The app provides lessons in maths and science through video animations and games.
More than 70 million users logged in 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. It’s targeting doubling its revenues to $1 billion in the current financial year ending in March 2021.