Aakash Institute to strategically merge with Byju's; Founders to turn shareholders

EdTech Decacorn Byju's has announced its strategic partnership with Aakash Educational Services Limited (AESL). In mid-January, reports started doing rounds that Byju's would acquire AESL for $1 Billion. But when we asked Byju's spokesperson, the company declined to comment. Yet, reports suggested that the deal would come through in 2-3 months.

Now that the partbership is offical, Byju Raveendran, Founder, and CEO, Byju's said, “I am happy to have Aakash Educational Services Limited (AESL), a market leader and the most trusted name in the test prep services, on board with us. Our complementary strengths will enable us to build capabilities, create engaging and personalised learning programs. The future of learning is hybrid and this union will bring together the best of offline and online learning, as we combine our expertise to create impactful experiences for students.”

About the deal between Aakash Institute and Byju's

This partnership brings together two of the largest and most-trusted education brands in India. It combines Aakash’s pedagogy expertise in the test-prep segment with Byju's content and tech capabilities. After the integration, Byju's will make further investments to accelerate Aakash’s growth. Byju's is currently valued at $13 billion. It has paid close to $1 billion in cash and equity for the acquisition; about $600 million in cash and the rest in stock. EY was the exclusive financial advisor and Phoenix Advisers was the exclusive advisor for the AESL.

Aakash Chaudhry, Managing Director, AESL said “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 omni-channel learning offering that will accelerate test-prep experience to the next level. 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 it’s Founder & Chairman Mr. 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.”

About Byju’s

Byju’s current value is at $12 billion as it has been on a fund-raising spree during the pandemic. Major investors include Facebook founder Mark Zuckerberg’s Chan Zuckerberg Initiative, Tiger Global Management and Bond Capital. Byju’s was founded by Byju Raveendran, a former teacher and the son of educators. He has 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.

The addition of Aakash is a significant step towards strengthening BYJU’S product offering. It reiterates the company’s focus on creating impactful learning products for students by adding more verticals, subjects, and languages to the same platform. In 2019, it acquired Osmo for $120 million. Last year, it bought kids-focused coding platform WhiteHat Jr. for $300 million. In another report, Byju’s also aims to acquire edtech rival Toppr in a $150 Mn deal. According to an Entracker report, Byju’s has also acquired Edtech Scholr in an all-cash deal of Rs. 15 crores.

About Aakash Institute

Blackstone Group-backed Aakash Educational Services runs Aakash Institute. It 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 over 250,000, according to its website. While online learning startups have thrived, offline tutoring centres have been badly hit by the pandemic, which has closed schools and tutoring centres since March last year.

With over 33 years of experience, Aakash has built a highly effective learning ecosystem. It has helped millions of young aspirants get into the country's best institutions. Under the leadership of Founder JC Chaudhry and Aakash Chaudhry, it will still continue to function independently.

A previous connection of Aakash Institute with Byju's

Aakash Insitute, in November 2020 had appointed Abhishek Maheshwari as CEO. Well, before Aakash, Maheshwari was the President of International Business for Byju’s. There, he was responsible for Byju’s global growth. But Byju’s has several times in the past stated that it will not personally venture into the offline education set.

But, Divya Gokulnath, at a TiE Conference, said that she believes that the new normal will not be 100% online. Instead, Byju’s will be that place where students come home and revise concepts. Schools will include online learning, but online cannot replace the school system. She also said that online can teach you hard skills, core concepts and the textbook notes, but empathy, team building and such soft-skills come in a social environment. The future is “blended learning”, she believes and hence, this acquisition may be a step into venturing into blended learning.