J C Chaudhry and Aakash Chaudhry, founders of Aakash Educational Services that runs the coaching centres under the name of Aakash Institute, and Blackstone, an investor in Aakash, have sold parts of their stakes for cash, and have also got shares in Byju’s parent firm, Think and Learn, at a valuation of around $12 billion.
Neither company disclosed the financial details of the acquisition. Byju’s has paid under $600 million in cash and the rest in stock to acquire Aakash Institute, a person close to the development said.
Byju Raveendran, founder & CEO of Byju’s, told TOI the acquisition will pave the way for it to offer various models of ‘blended learning’ — online and offline — as it scales Aakash Institute further in India.
Byju’s move to acquire the 33-year-old coaching centre network comes at a time when the education sector is seeing dynamic changes due to the pandemic. Aakash Chaudhry said he will continue to lead the operations of Aakash Institute post the merger.
“There are three big segments in education which will get positively disrupted. First is the K to10 segment, which is our focus area. Then there is test preparation, which is big. We will focus on this in a big way through the Aakash brand. Because of what has happened in the last 10-12 months, a lot of students are depending on both offline and online (channels). As soon as things re-open, they will rush back to the offline centres,” Raveendran said, explaining the rationale behind the acquisition.
“Test preparation is still predominantly an offline segment. For high-stakes exams (like engineering or medical), students and parents are risk averse. Though they will try new things, we are many years away from when they will completely rely on online,” he added.
This is the largest acquisition by Byju’s as well as by any ed-tech venture in India. Post the acquisition, Raveendran along with his wife Divya Gokulnath, and brother Riju Raveendran, will still have over 26% stake in Byju’s parent firm. Last month, TOI reported that Byju’s is raising additional funds of around $600 million which could push its valuation to $14-15 billion.
Byju’s, which last year alone raised $1 billion in capital, has triggered consolidation in the space. It acquired coding startup WhiteHat Jr in a $300 million cash deal. It is currently in the middle of acquiring smaller rival Toppr.
Byju’s plans to expand Aakash Institute to more Indian cities. Currently there are over 215 Aakash centres in India. Blackstone had first invested in Aakash in 2019 by putting around $183 million for an over 37% stake.
Aakash is said to have seen its revenue dip to Rs 1,000 crore for the year ended March 2021 due to the pandemic, compared to Rs 1,200 crore the year before.
Raveendran said Byju’s has grown its revenue by 100% in the financial year ended March 2021, aided by the increased demand for online education. This would translate into around Rs 5,600 crore, compared to Rs 2,800 crore in the year before.
Byju’s said it has a cumulative base of over 80 million students with 5.5 million being annual paid subscribers. It says its annual renewal rate is 86% and that it added 45 million new students in the first six months of the lockdown last year.
“While this partnership will enhance our operational verticals, Aakash will continue to operate as a separate entity with the same passion and commitment with which its founder and chairman J C Chaudhry incepted it. We are excited to partner with Byju’s, and will strive to deliver long-term value to our students, employees, investors, and other stakeholders.” said Aakash Chaudhry.