Byju’s, India’s second most valuable startup, on Monday announced the purchase of Aakash Educational Services Ltd (AESL) for about $1 billion, in what is touted to be the most expensive acquisition in the Indian edtech space. The deal also marked Byju’s focus on the Indian market for test preparations.
Byju’s has been reaping the gains of a covid-induced boom in edtech, with its valuation soaring to $13 billion recently from $8 billion in January last year. The company, which raised equity funding of $1.25 billion in 2020, could potentially overtake digital payments firm Paytm as India’s most valuable startup. Paytm is valued at around $16 billion.
In an interview, founder and chief executive Byju Raveendran spoke about the reasons for the Aakash acquisition, plans for the new fiscal and the company’s aim for a public listing. Edited excerpts:
Why did you acquire Aakash Educational Services?
We have been exploring the blended hybrid model, including online and offline learning, for some time now, which we believe is the right format. You can see our hybrid approach in our K-12 segment as well.
We could have created a hybrid model (for test preparation) ourselves, but that would have taken us 2-3 years to build and a total of five years to show results. Hence, with Aakash, we saw a real synergy coming together of conceptual learning.
For test prep, it is difficult to replicate the rigour and intensity of competitive exams online. You need a group studying environment and some interactions with teachers during preparation, which can only be achieved through offline play. Hence, this acquisition allows the online and offline world to come together in the best possible way. What will be the ratio of online-to-offline learning is difficult for us to comment on. It will be different for different students.
What are the segments Byju’s will double down on?
For us, K-12 is a big space, which has the potential to scale not just in India but globally. Test preparation is a big segment in markets like India. We will look to deepen our play for test preparation through the Aakash acquisition before thinking of heading to any international geographies.
There is another big opportunity with regard to the ‘upskilling’ and ‘reskilling’ segment and to disrupt university degree courses through online. Regulations are also changing for this segment, with universities increasingly having the option of providing education online. That is a big vertical Byju’s is absent in.
Are more acquisitions on the cards?
We are looking at a couple of acquisitions that will drive our international expansion. However, there is always that strategic decision to buy or to build. Sometimes, there isn’t a solution for us to acquire in the space where we might be thinking of entering. What is important for us is whether we can provide a synchronous offering of our acquisitions to our customer base.
Is Byju’s looking at a potential public offering?
For Byju’s, going public is a clear option, considering the growth that the company has been able to show, both through operations and inorganic acquisitions. We are seriously thinking of an 18-24 months timeline to look at a public offering. But it can take a bit longer, too, since we are in no hurry and will look at the right market timing. We do not need to make an initial public offering to give any (investor) exits, but for creating a large public company in the interest of the ecosystem in which we operate in. For Byju’s, an IPO will just be a big milestone. We are building a business to sustain for decades.
The article was first published on livemint.com