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Exclusive: Vedantu acquires Pedagogy in a cash and stock deal

Vedantu has acquired Pedagogy, an Ahmedabad-based edtech startup in a cash and stock deal. This is the second acquisition for the Tiger Global-backed company after picking up doubt-solving app Instasolv in February 2020.

Both companies have agreed to a share purchase agreement in which Vedantu will acquire 100% stake in Pedagogy across five tranches, Vedantu’s regulatory filings show.

The filings mention that Pedagogy promoters Archin Shah, Nipam Shah, Nita Shah, Aniket Shah and Ritesh Gandhi collectively hold 75.06% stake in the company. They will receive total consideration of Rs 21.4 crore comprising Rs 15.23 crore in cash and Rs 6.14 crore in Vedantu stock. Vedantu will acquire the remaining stake from other shareholders, pricing the acquisition around Rs 28.5 crore. 

The six-year-old company is based on a subscription model that allows its users access to popular books and digital courses from trusted publishers and coaching centres across the country for JEE, NEET, NET, CTET  and other entrance exams.

It’s worth noting that Vedantu offers online classes to students across grades K1-12 for all major boards and top competitive exams like JEE and NEET. According to sources aware of the deal, the acquisition will help Vedantu to expand its offering in the competitive exam preparation market. 

“Vedantu will leverage its large distribution network to scale-up subscriptions offered by Pedagogy. It’s likely to rebrand Pedagogy under its brand after some time,” said one of the sources aware of the roadmap of this acquisition. “There is no upside for any stakeholder in this deal. It’s more of an acquihire than an acquisition.”

In April 2020, Pedagogy had raised $400K  (around Rs 3 crores) in a pre-Series A round led by Inflection Point Ventures. The company did not disclose the name of other investors participating in that round.

Vedantu has responded to our queries by informing us about some more deal details,  possibly outside the formal share sale agreement. They indicated that they will share the same in a formal press release later today. We will update the story with those, should that be the case.

Fintrackr has also decoded Pedagogy’s current shareholding structure. Archin Shah is the largest stakeholder in the company with a 39.22% holding followed by Nipam Shah and Nita Shah who hold 13.78% and 10.04% stake respectively. Ritesh Gandhi, Baldevbhai V Patel and Dhinal Patel are other notable shareholders in the company, leaving just under 15% with other investors.

The development comes at a time when Vedantu is in talks to raise a $150 million round while seeking a $1 billion valuation. Entrackr had exclusively reported the development on June 16.

All top edtech companies in India have been on an acquisition spree for the past eighteen months. While this is the second acquisition for Vedantu, competitors Byju’s and Unacademy have collectively acquired around a dozen startups since January 2020.

The Byju Ravindran-led Byju’s has already taken over HashLearn, WhiteHat Jr, Aakash Educational Services, Scholr and is in advanced talks to acquire Toppr, Great Learning and Gradeup.  

During the same period, Unacademy bought Handa Ka Funda, TapChief, NeoStencil, PrepLadder, Mastree, CodeChef, Coursavy and Kreatryx. The Gaurav Munjal-led company is also acquiring two more startups: Rheo TV and Adda 24×7.

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