Byju's acquires Aakash Edu Services for $1 billion

New Delhi: Byju's has acquired test-prep leader Aakash Educational Services for nearly $1 billion (about Rs 7,300 crore) as India's biggest online education startup looks to build its position in the brick and mortar segment.

The acquisition is Byju's biggest and one of the largest ed-tech deals in the world. Post the transaction, Blackstone Group and Aakash Educational Services Ltd (AESL) founders will hold a minority stake in Byju's, which is valued at about $13 billion.

Byju's, the most valued ed-tech startup in the country, is backed by marquee investors like Mary Meeker, Yuri Milner, Chan-Zuckerberg Initiative, Tencent, Sequoia Capital, Tiger Global and others. It is estimated to have raised over $2 billion in

funding to date.

According to sources, Byju's is also in talks to raise an additional $600-700 million in funding that will help in further growth acceleration.

In the past, Byju's had acquired TutorVista and Edurite (from Pearson in 2017) and Osmo in 2019. Last year, the General Atlantic-backed company had bought coding training platform WhiteHat Jr for $300 million.

The edu-tech space has seen strong growth globally with the COVID-19 pandemic serving as an inflection point. Many edu-tech companies, including Vedantu and Byju's, have also raised funds in the past few months to accelerate their growth plans.

AESL Managing Director Aakash Chaudhry said the transaction with Byju's is part cash and part equity deal.

"It is close to 60-65 per cent cash and the remaining equity...The overall deal value is close to about $1 billion," he said during media interactions.

AESL and Byju's started exploring a deal about 6-7 months ago.

"This will be the largest integration in the education space in India, especially in the startup space...COVID has really opened the gates to online education significantly and going forward, we believe that all kinds of models in education will exist in K-12, test prep and even in higher education," Chaudhry said.

Together with Byju's, AESL will be able to provide students with the education it was providing but at a much larger scale with multiple delivery channels that can be innovated out of both ecosystems (online and offline), he added.

After the integration, Byju's will make further investments to accelerate Aakash's growth, he noted.

Chaudhry said Aakash Educational Services Ltd will continue to operate as a separate entity and further expand its presence in the country.

"At Aakash, we are looking to transform student experiences by steering innovative and digitally-enabled learning solutions. Together with Byju's, we will work towards building an omnichannel learning offering that will accelerate test-prep experience to the next level," he said.

In its over 33 years of existence, AESL has helped millions of students prepare for medical and engineering entrance exams. It has a pan-India network of 215 centres (including franchisees), and a student count of more than 2.5 lakh.

In 2019, private equity firm Blackstone had picked up a 37.5 per cent stake in AESL. While the company had not disclosed the financial details, sources said the Rs 1,350 crore transaction had valued AESL at $500 million (over Rs 3,545 crore).