Byju’s acquires Aakash in nearly $1 Bn cash and stock deal

Finally, edtech company Byju’s has announced the acquisition of  Aakash Educational Services Limited (AESL). The two companies have been in talks for the transaction for the past several months.

According to Byju’s, the acquisition will be done through a strategic merger and the company will make further investments to accelerate Aakash’s growth. While the company hasn’t disclosed the terms of the deal, sources aware of the development said that it consists of both cash and stocks to the tune of $1 billion.

Last month, Entrackr had exclusively reported about Byju’s $600-700 million potential new round that will largely be used to finance Aakash acquisition.

This is the first acquisition by Byju’s in a pure-play offline space. With over 215 centres across the country, Aakash Institutes runs offline coaching classes for engineering and medical entrance examinations. The acquisition would give a stronghold to Byju’s in the test preparatory segment.

Also read: Why Byju’s is willing to pay $1 Bn for Aakash Educational Services

Following the acquisition, Aakash founders JC Chaudhry and Aakash Chaudhry will continue to lead AESL’s growth and expansion. Both founders along with Blackstone will become shareholders in Byju’s. Blackstone had picked up 37.5% stake in Aakash Institute for about 1,350 crore.

The 33 years-old firm was valued at $500 million by the private equity firm at the time of investment in October 2019. Aakash's strong performance over the years seems to have triggered Byju’s interest. During FY20, its revenue from operations grew by 8.7% to Rs 1,214 crore from Rs 951.5 crore in FY19. 

Around 86% of this income was earned through income from direct coaching while the rest 14% was earned through franchise fees and product sales collected from franchise holders. During FY20, the company recorded profits of Rs 244.7 crore at an EBITDA margin of 33.89%.