The Purpose Of Byju’s Acquisition Of Aakash Educational Services

The Purpose Of Byju’s Acquisition Of Aakash Educational Services

Aakash Educational Services Ltd (AESL), a brick-and-mortar coaching center with a 33-year history, was purchased by Byju’s, the largest online edtech start-up in the nation, for close to $1 billion in cash and stock.

Introduction

The largest online education technology start-up in the nation, Byju’s, has paid approximately $1 Billion in cash and stock to purchase the brick-and-mortar coaching facility Aakash Educational Services Ltd (AESL), which has been in business for 33 years. At the moment, Byju’s is worth $13 billion.

After the acquisition, Byju’s will be owned by the founders of Aakash and Blackstone Group, which has a stake in AESL. Aakash will serve as Byju’s brick-and-mortar-focused entrance exam prep division. The acquisition of AESL by Bbyju ranks among the biggest by an Indian start-up, surpassing Flipkart’s estimated $330 million purchase of Myntra in 2014 and Snapdeal’s $400 million purchase of Freecharge in 2015.

READ MORE:

Why Are Edtech Enterprises In India Struggling; Detailed Breakdown

How Edtech is fooling you in 2022

From Dropout to Millionaire: Physics Wallah’s Success Story

Information About Byjus

Bangalore is home to the worldwide educational technology business Byju’s. Byju Raveendran and Divya Gokulnath launched it in 2011. Byju’s is estimated to be worth US$22 billion as of March 2022, and the firm states that over 115 million students are now enrolled.

The company introduced Byju’s: The Learning App in August 2015. They debuted Byju’s Parent Connect app and the kid-friendly Math app for Byju in 2017. It had 15 million users by 2018, of whom 900,000 were paying customers. Byju’s became India’s first edtech unicorn in the same year.

By 2019, sixty percent of BYJU’S students were from small towns and rural areas. Aakash Educational Services Ltd. was purchased by Byju’s in April 2021 for an estimated US$950 million in cash and shares. In accordance with the agreement, Aakash and Blackstone’s founder’s Group would earn minority shares in Byju’s.

AESL Expansion Under Byjus

Through acquisitions, Byju’s, one of the most valuable businesses in the world with funding from Mark Zuckerberg’s Chan Zuckerberg Initiative and Tiger Global Management, has grown its clientele internationally. (AESL) It quickly grows across the nation as it becomes a hybrid edtech coaching company.

In the next few months, AESL will open 106 additional national centers. These will include both extension centers and independent centers. J C Chaudhry established AESL in 1988 as a small private tutoring center in the neighborhood of Ganesh Nagar in West Delhi.

Aakash increased from having 12 students in 1988 to having 215 centers and more than 250,000 students. By the end of this year, it is hoped to have roughly 5 lakh pupils.

The future of education is hybrid, and exam preparation accounts for a sizable portion of it in India. The future solution would involve combining both (physical) and digital classrooms, according to Abhishek Maheshwari, CEO of AESL.

By developing centers in Tier 3 and Tier 4 cities, AESL is expanding its reach and entering Bharat. So that students do not have to go to larger cities to study, this enables it to become closer to their clients.”In the past, students would go to places like Delhi, Kota, and Hyderabad. According to Aakash Chaudhry, our desire and zeal to penetrate Tier-3 and Tier-4 markets with physical centers have increased.

Services Offered By AESL

To help students succeed on foundational-level tests like the KVPY, NTSE, Olympiads, and admission exams for engineering and medicine, AESL offers test preparation services. Approximately Rs 1,200 crore is the institute’s yearly turnover.AESL expects to hire more than 2000 individuals this year despite having a staff of over 5000 people.

This serves to accommodate the increase it is seeing in the current centers as well as being a component of its offline or physical center development plan. The company hires talent from various fields, including academics, technology, sales, marketing, operations, and other enabling roles.

Effects Of AESL Acquisition With BYJUS

The firm will be able to expand the teacher-student relationship and introduce it to untapped areas thanks to the additional centers. Additionally, this would assist the company in raising the bar for the test prep industry. This involves implementing new technology to make learning user-friendly for students in both physical and digital settings.

As the popularity of online learning has surged due to the coronavirus outbreak, AESL sees demand across the nation. While schools and companies are closed, professionals and students alike are trying to advance their abilities. It faces competition from both new and established educational institutions for the $180 billion domestic education market, which has gone online in response to the new reality.

Abhishek Maheshwari was in charge of Byju’s international business and was in charge of accelerating Byju’s international expansion. During his time as CEO of Disney in India, he also oversaw the design and execution of strategy for all of the company’s brands, companies, and operations.

AESL Will Continue As Omnichannel Learning

According to its managing director Aakash Chaudhry, AESL will continue to function independently as a coaching center. He said, “Together with Byju’s, we will work towards establishing an omnichannel learning solution that will speed the test prep process. Blackstone acquired 37.5% of AESL in 2019, giving it a $500 million valuation.

Aakash’s business goals were hurt by the pandemic as sales fell from Rs 1,200 crore as of March 31, 2020, to Rs 1,000 crore for FY21. Byju’s, on the other hand, has had consistent growth in both its revenues and valuation thanks to both organic growth and acquisitions.

Benefit To BYJUS

With the merger, the two companies could create the largest omnichannel for students in India. Students who sought access to actual classrooms received it from And Byju’s has provided for individuals who desired to access knowledge and education online.

Together, we will make the most of the physical space, technology, and online education to give students something special. With more than 80 million users, 5.5 million of whom are paying subscribers, Byju’s user base, which prepares students taking undergraduate and graduate-level courses, has significantly increased. Over $100 million in sales was earned by the lucrative Byju’s.

Conclusion

Byju’s, a young ed-tech company, has purchased Aakash Educational Services Ltd (AESL) to increase its market share in the nation’s test preparation market. According to insiders, the transaction, which is close to $1 billion (about $7,300 crore), is Byju’s largest acquisition to date.

This purchase (AESL) will assist Byju’s in reaching $1 billion in sales for the upcoming fiscal year as it pursues worldwide expansion. According to a report, it is expected to end the following year with sales of $1.2-1.3 billion. According to the edtech business, current revenue run rates hover around $800 million.