Acquisition of Aakash Educational Services Limited (AESL)

by BYJU's

Submitted By –
Group No. – 5
Ayush Srivastava (21XPGDM08),
Mohd. Arshil (21XPGDM14),
Sandeep Yadav (21XPGDM19)
Shubham Dixit (21XPGDM21)
Sumit Tiwari (21XPGDM09),
of
Ex. PGDM 2021-22, IMI, New Delhi
 ACKNOWLEDGEMENT

We would like to extend our sincere gratitude to Dr. Reena Nayyar for including
this assignment in the curriculum of Financial Issues in Mergers and
Acquisitions. This assignment helped our group gain huge knowledge and
insights about the recent developments in the field of business, specifically
mergers & acquisitions.

We would also like to extend our gratitude to the International Management

Institute, New Delhi for giving us the opportunity to learn the subject
‘Financial Issues in Mergers and Acquisitions’’ as a part of the curriculum.
This subject has helped us in upgrading our domain knowledge.
 COMPANY INFORMATION
We can all agree that the epidemic made us realize how critical it is to have effective Ed-tech
companies in India, especially when children don't have the opportunity to attend to school and
study. Ed-tech businesses have succeeded because they provide services at a reduced cost and
allow students to learn from any location at any time. BYJU’S is at the top of the list when it
comes to India's Ed-tech start-ups. The cash-and-stock deal was worth around $1 billion,
making it one of the most expensive in India's rapidly growing education technology sector.
Web-based learning has been increasingly common in our daily lives in recent years as society,
science, and innovation have evolved, and people's need for high-quality educational plan
items has expanded. Because to Covid-19, organizations have been obliged to migrate from
disconnected to online mode.
As a result of the crisis, companies that were previously resistant to change have been forced
to embrace new innovation. This debacle has demonstrated the cost-effectiveness of online
education and learning. The most important choice was to abandon traditional lectures in
favour of online learning.
According to a YouGov survey, the most popular tool in India is BYJU’S, with 65 percent of
parents stating that their children had used it. According to their parents, just roughly 30 percent
of children used Unacademy and Vedantu, the runners-up. Over half of Indian parents are
afraid to send their children back to school, according to a YouGov survey. Parents believed
their children were learning successfully by using online platforms on their own in 48% of
cases. Following the pandemic, 55% of parents said their children were now enrolled in an
online learning platform, up from 40% prior to the epidemic.

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 BYJU’S
BYJU’S is a Bangalore-based Indian multinational educational technology corporation. Byju
Raveendran and Divya Gokulnath launched it in 2011. BYJU’S is valued at US$21 billion as
of November 2021, making it the most valuable educational technology business in the world.
BYJU’S is a Bangalore-based Indian multinational educational technology corporation. Byju
Raveendran and Divya Gokulnath launched it in 2011. BYJU’S is valued at US$21 billion as
of November 2021, making it the most valuable educational technology business in the world.

As of January 2022, the Indian company BYJU’S was the highest valued Ed-Tech
unicorn, at 21 billion dollars. Of the remaining nine companies provided here, four
were from the United States, three were from China, with one from Austria, and an
additional unicorn from India.

According to BYJU's, they plan to grow into offline education as well. Aakash, the most well-
known brand, has the most well-established infrastructure, leading to a large clientele. Aakash
Educational Services Ltd. (AESL) will also be able to go to the online phase, where AESL
will receive online assistance and benefit financially from BYJU's.
BYJU's comparable characteristics will allow them to expand their capabilities, develop
individualized learning programmes, and recruit new employees. Learning's long-term future is
a mix, and this connection will integrate the finest of both disconnected and web-based learning,
as well as expertise, to make meaningful experiences for understudies.
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 AAKASH

Aakash Educational Services Ltd, a renowned name in JEE and NEET preparation, has been
leading aspirants to success.

Mr. J C Chaudhry established the first "Aakash" centre in 1988, giving tutoring services for
medical entrance exams. Through their three separate verticals, Aakash Medical, Aakash IIT-JEE,
and Aakash Foundations, they are now well-known for providing specialist test preparation services for
medical, engineering, and foundation level exams.

With a 34-year history, 215+ centres across India, 2200+ master persons, and 2.5 Lakhs +
delighted under-studies, Aakash Educational Services Ltd. is known for its broad, result
oriented JEE and NEET preparing programmes.

Aakash Educational Services Limited (AESL), backed by the Blackstone Group, is a 33–year–
old coaching institute that prepares students in classes 8–10 for school boards and junior
competitive exams, including medical and engineering entrance exams, school board exams,
KVPY (Kishore Vaigyanik Protsahan Yojna), NTSE (National Talent Search Examination),
Olympiads, and other foundation level exams. Aakash Medical, Aakash IITJEE, and Aakash
Foundations are the three types of offline major programmes. It operates over 200 coaching
centres around the country.

Aakash institute began its journey at a time when people did not consider coaching institutions
to be a growing business; however, Aakash institute built its name and reputation in the market
by working diligently, and the company has remained dependable to its students in the education
market since its inception, changing with the times and needs of the students.
Surprisingly, the group was able to make 86 percent of its revenue from direct teaching, with
the rest coming from franchise fees. They made a profit of Rs. 244.7 crore last year, with a
margin of 33.89 percent.

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 INDUSTRY ANALYSIS
According to a UNESCO report, the pandemic has adversely impacted over 290 million
students across 22 countries due to the closure of schools in lockdown. In India, schools and
colleges shut down with immediate effect with the countrywide lockdown in place. The
structure of schooling was one of the first to be affected. Only a handful of private schools
could adapt to online teaching while low-income private and government school counterparts
have completely shut down owing to a lack of organizational access and exposure to e-learning
solutions.
In the aftermath of the havoc wreaked by the pandemic, there have been some landmark shifts
in the Indian education system. A major one is an introduction of the National Education Policy
2020 (NEP) which was launched on July 29, 2020. The new policy ushers in a new era of
education after a gap of 34 years. The NEP aims to democratize education by giving universal
access at all levels of school education, thus envisioning a future with 100% school
enrolment/education for children aged 6–14 years. The key focus is given to technology as per
the new policy. Additionally, e-courses was developed in regional languages, and technology
would be extensive and a core part of education planning, teaching, learning, assessment,
teachers, students, and student training. Moreover, there was a special provision for socially
and financially challenged groups in the new policy. The Cabinet also dedicated a unit to
manage digital infrastructure, digital content, and capacity building under their wings to make
sure all the e-education needs are fulfilled.

‘Thinking Digital to being Digital’ – The rise of Indian Ed-Tech

The country has witnessed growth in the IT sector and a shift towards education; between
January 2014 and September 2019, more than 4,450 Ed-Tech startups have been launched in
India. The sector got a much-needed push thanks to digital adoption; close to half a billion
internet and smartphone users contributed to it. The Ed-Tech sector in India can be compared
in two phases – pre-COVID-19 and during/post-COVID-19. Prior to the pandemic, the Ed-
Tech sector was growing in India but at a relatively slower rate as online education was still
met with some resistance. The lack of technology posed a major concern of reskilling and
upskilling for teachers. While the pandemic has wreaked havoc across sectors and industries
in the Indian market, it has been a watershed moment for India's Ed-Tech sector.

The lockdown and fear of COVID-19 spread have taken schools, colleges, and educational
institutes online, thus leading to the emergence of many Ed-Tech products and services and a
rise in adoption. Though in its nascent stage, there has been a significant transformation in
curriculum development and pedagogy where we have moved from thinking digital to being
digital. Ed-Tech firms like Vedantu and BYJU’S (tutoring), Toppr (learning), and Unacademy
(video lessons) have seen a substantial rise in traffic share during the lockdown. BYJU’S added
7.5 mn new users during the lockdown; Toppr also recorded 100% growth in the paid user
base.

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 THE ROAD FORWARD
In the light of these trends, the next cycle of growth in the education sector will be driven by
the 4 E's: Ed-tech, edu-content, e-learning, and entrepreneurship. Given that the traditional
focus has been on offline education, a mix of online and offline is what will propel the sector
forward. The National Education Policy's integration with Ed-tech is a welcome measure as it
is a step towards inclusive, cohesive, and productive education in India.
The future of Ed-Tech, therefore, looks promising, but it depends on the sector’s ability to
quickly adapt to the changing times and offer personalized solutions in diverse categories. The
National Education Policy’s focus on multilingualism online learning will instil critical
thinking in children from a young age, thus making education better-rounded, useful, and
fulfilling to the learner.
With the current education setup, online learning is here to stay. Therefore, to keep the
momentum going, it is important for the sector to constantly keep innovating to capitalize on
the void created by the closure of traditional classrooms. This innovation will spark critical
thinking, collaboration, and creativity in the classroom. These innovations can be brought in
with the use of immersive technologies such as Augmented Reality and Virtual Reality.
As an innovative Design + Technology organization, Tata Elxsi has been transforming
eLearning, eTraining, Learning & Development, and Ed-Tech experiences. We have been
working actively with academic institutions, universities, corporate houses in helping them
define pedagogical changes by developing 2D, 3D, and immersive content and delivery
experiences.

The most important element of this merger and acquisition is the objective
behind this acquisition: -
By acquiring the Aakash, BYJU’S establishes its position in the exam preparation market, since
it is one of the finest options for students because it combines BYJU’S technology with Aakash
knowledge, allowing students to learn at home while still receiving expert supervision.
BYJU’S has a stranglehold in the school education sector, whilst Aakash is the market leader
in competitive exams. To take advantage of this cross-segment diversification, the
companies merged.
Test prep as an important market for Ed-tech players: -
K-12, test prep, skill development, and online certification are the four key areas of ed-tech.
Because students are obsessed with grades, the right mix of effective coaching and advice helps
them get into top engineering and medical schools. People who want to secure gilt-edged
government employment can also benefit from test practice.
Create base in the brick and mortar style coaching education: -
No matter how much technology advances, the traditional method of teaching, which includes
the actual presence of both students and teachers, remains indispensable, as BYJU’S realizes.
Cross Sectional Diversification: -
BYJU’S has a stranglehold in the school education sector, whilst Aakash is the market leader

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in competitive exams. To take advantage of this cross-segment diversification, the companies
merged.

Future of learning is hybrid: -

This partnership will bring together the best of both offline and online learning. BYJU’S high-
tech and tried-and-true platform, combined with Aakash Institutes' skilled faculty, will create
a hybrid learning model in which students will be able to learn online while also being able to
seek offline guidance from its brick-and-mortar presence as needed. As we pool our resources,
we'll be able to provide students with memorable experiences. The epidemic has brought the
value and urgency of a blended learning style to the fore. According to industry reports, the
exam preparation and after-school tutoring (high school) area in India is predicted to be a US7-
8 billion opportunity, with 55-60 percent growth expected over the next 4-5 years.

Benefit for existing Subscriber: -

Existing BYJU’S members, particularly those in grades 9-12, can choose to enrol in AESL's
core entrance exam courses immediately, increasing the platform's stickiness.

Ultimately achieving the Goal: -

The agreement would also enable BYJU’S to add additional verticals, topics, and languages to
its online platform, as digitization, combined with accessible and affordable internet access,
has effectively encouraged students to study, learn, and improve their knowledge in order to
achieve their goals. When it comes to how BYJU’S approached Aakash, it all started with a
collaborative plan. They discussed the potential of working together in June 2020, but after six
months of collaboration, they began discussing acquisition in October, and they were able to
reach an agreement in December.
BYJU’S eventually bought Aakash through a strategic merger in April 2021. Aakash
Chaudhry, Managing Director and Co-Promoter, and his family are giving up their entire
ownership in the company in exchange for a 70:30 cash-equity arrangement in which they will
acquire an unknown stake in BYJU’S in exchange for around 30% of the payout.
During the pandemic-caused lockdowns, Ed-Tech companies such as Vedantu and BYJU’S
(tutoring), Toppr (learning), and Unacademy (video classes) saw a significant increase in traffic
share. According to a joint analysis by BARC India and Nielsen, screen time on education apps
on smartphones has increased by 30% since the shutdown.
BYJU reportedly added over 33 million users on its platform, bringing its total to 75 million,
while Unacademy's user count increased to 40 million by January 2022. Toppr has also seen a
100 percent increase in paying users. The patterns also indicate that screen time for online
learning has grown not only for K-12 and post-K-12 students, but also for professionals.

Investment trends in the Indian Ed-tech sector

Following China and the United States, India is one of the main markets for global venture
capital investing in education. According to reports, India's education system has received over
INR 300 billion (US$4.04 billion) in financing since the Covid-19 outbreak began. Ed-tech
companies received a total of US$3.81 billion in investment between January and August 2021,
according to data from analytics firm Tracxn.
BYJU’S, India's largest Ed-tech business, received the lion's share of around US$1.7 billion in
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investments in 2021, followed by Eruditus, which received US$650 million in funding, and
upGrad, which received US$185 million. Unacademy raised a total of US$440 million in the
same year, bringing its worth to US$3.44 billion.

BYJU’S completed multiple acquisitions in 2021, including the almost $1 billion purchase of
Blackstone-backed Aakash Educational Services. BYJU’S has also purchased Epic, an online
library for children aged 12 and younger, for US$500 million, Great Learning, an online
professional and higher education firm located in Singapore, for US$600 million, and Toppr,
an after-school learning platform based in Mumbai, for US$150 million.
According to a survey by Inc42 Plus, India reported 346 Ed-tech investment agreements worth
US$2.2 billion between 2014 and the first half of 2020. Online test preparation firms received
roughly 79 percent of the overall financing, followed by online certification (8.4%) and K-12
education (6%).

The educational technology industry, also known as Ed-Tech was valued at over 750
million U.S. dollars across India in 2020. This value was estimated to significantly
increase to over four billion U.S. dollars in 2025 in the country.

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 In 2020, the highest valued Ed-Tech company in India was BYJU’S with a value of 12
billion US dollars. Apart from BYJU’S it was only Unacademy, which crossed the value
of more than a billion US dollars. Eruditus and Vedantu have a value of more than half
a billion each. Simplilearn, Auxilo, Extramarks, iNurture, and educational initiatives
have a value of less than a hundred million each.

In 2020, the Ed-tech platform BYJU’S had most users with a total of 57 million users. In
contrast, Upgrad had less than a million users and is far less used than competitors such as
Vedantu or Unacademy with more than 25 million users each.

Over 1.43 billion U.S. dollars was raised as funding by Indian Ed-Tech companies in
2020. Out of the total funding, over 57 percent was raised by BYJU’S in India.

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 SOURCES OF COMPETITIVE ADVANTAGE
This collaboration brings together two of India's largest and most trusted education brands, it
combines Aakash's test-prep pedagogy expertise with BYJU’S content and technology
capabilities. Following the integration, BYJU’S plans to make additional investments to
accelerate Aakash's growth.

With over 33 years of experience, Aakash has created a highly effective learning ecosystem that
has assisted millions of young aspirants in gaining admission to the best institutions in the
country. AESL joined forces with Blackstone in 2019 to form India's largest digitally enabled,
omni-channel test preparation company. It will continue to function independently under the
phenomenal leadership of its Founders, Mr J.C. Chaudhry and Mr Aakash Chaudhry.

In the Ed-tech industry, Byjus has a substantial market share. Following the epidemic, it was
evident that hybrid learning was the way of the future. Students require both offline and online
materials. Byjus began discussions with Akash (AESL) to form a relationship to build a hybrid
learning environment in order to capitalise on this possibility. However, the negotiations
moved in a different way, and Byjus ended up acquiring AESL. The acquisition of AESL by
BYJU’S is the strategic move aiming to increase its market share and to promote hybrid
learning. BYJU’S was known for its technological capabilities so to gain expertise in offline
mode it joined its hands with AESL.

AESL has struggled to compete with educational institutions such as Allen and Resonance in
recent years. The covid epidemic makes it even more difficult for offline coaching institutes to
function normally. AESL has a large presence across the country, including in locations where
Byjus has yet to reach. As a result of acquiring Akash, Byjus now has a new dimension in
terms of offline classes. At the same time, it has expanded Byjyus' geographical reach. So it
has helped both the companies to expand their business and it was a strategic move from both
ends. One of the biggest and lucrative markets for edtech companies is “Test Preparation”.
Students in 11th and 12th grades, as well as those preparing for competitive exams, take part
in large numbers in all-India test series to assess their preparation. By acquiring Aakash, Byjus
makes its position in the test prep segment which is the greatest choice for students, as it
delivers a blend of both BYJU’S technology and Aakash knowledge as well as expertise in the
segment, allowing students to learn from home while still receiving expert supervision. Due to
Covid 19, there is a shutdown of offline schools and coaching centers, in this scenario company
like Byjus has seen a significant rise in their K-12 online lessons as well as test-preparation
modules. However, important competitors such as Unacademy have recently beaten BYJU’S
by introducing with their live tuition for competitive exams. Surprisingly, BYJU’S was forced
to switch from pre-recorded tutorials to a comparable live-lesson style last year as a result of
Unacademy's arrival and its live training modules. That, however, was not enough.

With traditional schools slowly reopening and Ed-tech competitors catching up, the company
is under pressure to preserve its market leadership and increase its market footprint. This
acquisition is the necessity for Byjus to expand its position in the competitive test preparation
sector in order to expand its reach and revenue. And Aakash is the ideal target, given it is the
market leader in offline coaching for medical and engineering admission exams. On the other
hand, talking about Akash this deal will be boon for the company who is keen on developing
its omnichannel and digital offerings in order to continue on the path of providing high-quality
education and growth.

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So overall if the deal goes in a right way it’s a WIN-WIN situation for both the companies.
How the resources and capabilities of the acquired firm complement or supplement the
resources of the acquiring firm:

The Aakash Institute, which has 200+ physical coaching centers in 130 cities for providing
engineering and medical test prep services for students in grades 10-12, is backed by the private
equity firm Blackstone Group, which invested $500 million in the organization in 2019. It
also provides foundation courses for children in grades 8-10 in preparation for school boards
and junior competitive exams (a notable synergy with BYJU’S). Akash has a wide portfolio as
it also provides test preparation services to students preparing for KVPY, NTSE, Olympiads,
and other Foundation level exams. The offline major's programs are divided into three
categories:

Aakash Medical,
Aakash IIT-JEE,
and Aakash Foundations (for classes 8-11)

According to its website, the company employs more than 250K learners.

Aakash, interestingly, has been establishing itself in the edtech sector. In January 2020, the
business paid INR 50 crore (almost $7 million) and bought the whole interest of Info Edge
(India) in the edtech content and assessment platform Meritnation. If the BYJU’S-Aakash
agreement goes well, it will be a win-win situation for both companies. With its skilled faculty,
Aakash has established and maintained the best standards of teaching and result-oriented test
preparation for some of the most difficult entrance exams such as JEE, NEET, NTSE, and
others over the years.

Talking about BYJU’S, which was founded in 2015, is India's leading provider of
individualized learning programs for school children. The app creates personalized learning
programs for individual students based on their proficiency levels and capabilities, allowing
them to learn at their own pace and style.

It has over:
80 million students learning from it,
5.5 million annual paid subscriptions,
an annual renewal rate of 86 percent
During shutdown, BYJU’S gained 45 million additional students to its platform in just six
months.
With their shared vision to create value for the students and with their unique learning
experience both the company help each other to create a learning ecosystem by combining their
resources and capabilities.
The business expertise and the geographical presence of AESL in even small cities can help
the BYJU’S in many ways:

Helps in Building Trust - Aakash is well-liked and trusted among students preparing for
medical and engineering entrance exams. BYJU’S being a young firm, their partnership with
Akash will be valuable in developing trust among BYJU’S users. Aakash already has a good
reputation in the market, which will help BYJU’S in a number of ways. AESL has a 33-year
track record of earning the trust of JEE and NEET aspirants, and now BYJU’S will have access
to the same benefits. E-Learning app development will gain more user trust as a result of the
collaboration between AESL and Byju.
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Increases Business Reach - BYJU’S has taken a big step forward in terms of growth by
collaborating with AESL. As a result of this agreement, BYJU’S will see a huge rise in
business. Earlier it was known only among the online users but now it will have access to
offline users as well by acquiring Akash.

Add On of Expert Faculties - Byju has, without a doubt, the best faculty for any
educational course. Aakash, on the other hand, has experienced teachers who have worked in
the same field for the past 23 years. BYJU’S faculty is young and innovative, while Aakash's
is experienced. BYJU’S top staff of experienced and brilliant professors will result from the
combination of these two. The BYJU’S will benefit much from the AESL instructors.

Increase Product Offering – The addition of Aakash to BYJU’S product lineup is a huge
step forward. By adding new verticals, subjects, and languages to the same platform, the
company reaffirms its commitment to creating meaningful learning products for students.

The growth strategy pursued through the deal and the type of synergies
expected post- acquisition.

Talking about the growth strategy, Aakash will continue to expand for its own business interest
and growth road map to reach out to more students with their quality of education in more
cities. Adding value to Aakash, it will add value to the overall system. Second, the expansion
will directly advantage BYJU’S market. This will make Aakash centres kind of the physical
point of contact for all kinds of services under the name of BYJU’S as well. This depends on
what kind of program a student is taking—is he/she taking a test prep or K-12 program.
BYJU’S focus is on K-12 students, and Akash’s focus is only on test prep. Byjus focus is to
expand physical and their focus to expand digitally.

Akash have plans to go outside India, especially the Middle East, where there are a lot of
Indians and children of the Indian community who have the aspiration to write entrances for
medical and IITs. That will be a logical extension of Aakash to the Gulf market. BYJU’S
presence there will help them significantly as they have a base and market understanding.

Akash has around 215 centres and it expects to add 100 to 150 centres in two years post
acquisition. They will be a combination of extension centres and full-fledged centres,
technology-led centres to fulfil the need of students, mostly in tier-II and tier-III cities. And the
investment will come from a single entity (BYJU’S). Post the deal the Byjus will make further
investment in AESL to increase its growth curve.

BYJU’S is the most valuable Indian start-up after Paytm, with a valuation of around $13
billion. BYJU’S educational offering is currently limited, in the sense that, as an online
medium, it lacks the opportunity for face-to-face physcial connection with students. With
AESL on board, BYJU’S may now circumvent this barrier by utilising the former's physical
infrastructure to provide offline coaching to non-test prep students.

Additionally, existing BYJU’S users, particularly those in grades 9-12, can immediately enrol
in AESL's core entrance exam courses, increasing the platform's stickiness. Aakash
Educational Services would be able to add online learning to its services as a result of the
partnership with BYJU’S. "The physical centres are frequently overcrowded, and courses
might last for hours, causing students inconvenience." The concerns can now be reduced when
their courses become hybrid," analysts stated.
The future of learning is hybrid, and union of both companies will bring together the best of
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offline and online learning as they pool their resources to provide students with memorable
experiences. The pandemic has highlighted the necessity of blended learning. BYJU’S has
raised around $460 million in new fundraising this week after raising more than $1 billion from
investors last year. The Bengaluru-based firm is in talks to buy rival Toppr in a deal worth
more than $100 million. WhiteHat Jr was purchased for $300 million by the firm last year. So
the company is in talks for more investments in the coming years.

During the lockout, BYJU’S, which claims to have 80 million registered users and 5.5 million
subscribers, said it was able to recruit 45 million new students to its platform in just six months.
According to Aakash Chaudhry, MD of AESL, the deal with BYJU’S will allow the company
to reach a larger audience. Students interested in medicals and IIT usually begin developing
their skills in classes 8-10. "That is where BYJU’S presence is strong, and we will gain greater
visibility." According to Chaudhry, Aakash's existence is only confined to about 215 test prep
centers, this merger will help both companies in expanding.

Type of Synergies Expected Post Acquisition are:

Cost Saving Synergy:

• Shared Information Technology: Both the companies will have access to information
technology, and AESL could leverage upon the technology used by the Byjus.
• Improved Sales and Marketing: AESL can leverage upon the marketing channels used
by Byjus, in order to expand their business abroad.

Revenue Upside Synergy:

• Complementary Products: Akash’s presence in medical, engineering and foundation
courses for classes 8-9 will add remarkable synergies with BYJU’S. The addition of
Aakash to BYJU’S product lineup is a huge step forward. Byjus can make use of
expert faculties of Akash in expanding their business. By adding new verticals,
subjects, and languages to the same platform, the company reaffirms its commitment
to creating meaningful learning products for students.
• Complementary Geographies and customers: The presence of AESL in Tier 2 and Tier
3 cities will allow the Byjus to take advantage of the increased demographic access,
thereby producing higher revenue by adding more students.

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 ANALYZING THE IMPACT ON THE INDUSTRY
The acquisition signifies that the market is changing, customers are changing. The alignment
of business is changing and moving significantly towards technology. These are the times, even
if you are a 30-year-old brand when you have to be honest and realize the direction the market
is going. From a tuition centre to a national brand, Akash have moved a long way. But BYJU’S
is more prepared and in a better place to take a brand like Aakash forward. While technology
will disrupt the market, the companies had to assess which side of the disruption they wish to
be—they want to be on the side where they get disrupted and are not left with a choice or be
part of the disruption. Akash choose to be part of the entity and redefine the industry.

BYJU’S interest in offline test prep leader Aakash comes at a time when brick-and-mortar
schools are reopening, and BYJU’S Ed-tech leadership position is under attack.
After Unacademy adopted a live-learning model last year, BYJU’S altered its approach,
reworked on its strategy and shifted its focus to 'live lessons.'
According to experts, the test prep sector will witness greater activity as offline players
attempt to get online.

Test Preparation is an ever growing sector in India with more and more students enrolling for
engineering and medical courses, the country is expected to have around 37 Mn paid edtech
users by 2025 compared to 10 Mn in 2020. Among the four major areas of edtech – K-12, test
prep, online certification and skill development – the average student sizes of test prep and K-
12 are expected to see maximum growth. With acquisition of AESL by Byjus, the trend of
hybrid learning will go in rise and more and more players will be seen in the way of
transforming the culture.

According to a recent analysis by EY-IVCA, the Indian ed-tech market is expected to grow 3.7
times in the next five years, reaching $10.4 billion in 2025 from $2.8 billion in 2020. By 2025,
the category will have more than 37 million paid subscribers.

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 DEAL STRUCTURE

BYJU’S-Aakash Acquisition Process:

BYJU’S announced that it will invest an additional $400 million in Great Learning to help it
expand and improve its position in the professional and higher education market. The
transaction comes only days after BYJU’S announced the $500 million purchase of Epic, a
digital reading platform located in the United States.
General Atlantic, the Chan-Zuckerberg Initiative, Naspers, Silver Lake, and Tiger Global are
among the investors that have funded BYJU’S. It raised over $1 billion from investors in 2020,
and it raised about $1.5 billion in tranches earlier this year from a group of investors including
Facebook co-founder Eduardo Saverin's B Capital Group, UBS Group, and Blckstone.
Last year, BYJU and Aakash's teams began negotiating in the month of June 2020. They
explored the potential of collaborating and collaborating at the moment. The debate regarding
the acquisition began in October, and they were able to reach a deal in December. BYJU’S
eventually bought Aakash in a strategic merger in April 2021.
Aakash Chaudhry, Managing Director and Co-Promoter, and his family are giving up their
entire ownership in the company in exchange for a 70:30 cash-equity arrangement in which
they would acquire an unknown stake in BYJU’S in exchange for around 30% of the payout.

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 COMPETITIVE STRATEGY
Byju feels that the Indian curriculum is mostly focused on tests, and that students are taught to
pass exams. Curiosity, asking questions, and seeking solutions, they believe, constitute true
learning.
BYJU’S recognizes that some pupils like to learn via tales, while others prefer to learn through
images and ideas. As a result, BYJU’S covers every type of learning in some way.
BYJU’S hired young children as teachers for the younger youngsters. With this approach, it
attempted to meet student psychology, such as the belief that if a youngster their age can
understand the principles, they can as well.

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 ANALYSIS OF THE DEAL
From collaboration to acquisition
The teams from BYJU and Aakash began talking in June 2020 last year. They spoke about the
possibility of partnering. The acquisition argument began in October, and they were able to
strike an agreement in December. In April 2021, BYJU’S acquired Aakash in a strategic
merger.
Aakash Chaudhry, the company's Managing Director and Co-Promoter, and his family are
giving up 100% ownership in return for a 70:30 cash equity deal in which they would receive
an undisclosed interest in BYJU’S in exchange for about 30% of the dividend. BYJU’S is
unlikely to make any changes to the company's primary operation as a result of its acquisition
of Akash.
According to a press statement, however, the firm plans to make further investments to help
the conventional educational institution network thrive. As a consequence of the arrangement,
BYJU’S will be able to extend its online platform by adding additional verticals, themes, and
languages.
Byjus suggested paying $1 billion in cash and stock for Aakash Educational Services (AESL),
which is backed by Blackstone Group. The firm will be able to increase its presence into the
offline sector by acquiring Byju. When the deal was finalised, they intended for Blackstone
Group and AESL founders JC Chaudhry and Aakash Chaudhry to become minority
shareholders in BYJU’S. On the other side, AESL will continue to function independently.

Before buying Aakash Educational Services, Byjus took into account the
following factors:
• Test preparation as a profitable business for Ed-tech firms
The four main areas of ed-tech are K-12, exam prep, skill development, and online certification.
Because youngsters are focused with their grades, the right coaching and counsel can help them
get admission to prestigious engineering and medical schools. Test preparation can also help
people who desire to land a high-paying government job. Online test prep start-ups are
flourishing as a result of these causes. By purchasing Aakash, a mix of BYJU’S technology
and Aakash experience, BYJU’S makes its position in the test prep segment the optimal choice
for students. This allows students to learn from home while still receiving professional
supervision.
• Create base in the brick-and-mortar style coaching education.
BYJU’S recognises that, no matter how much technology goes, the traditional way of teaching,
which incorporates the real presence of both students and teachers, is still necessary. Despite
the fact that BYJU’S has previously acquired a number of educational businesses, Aakash is
the company's first offline acquisition. In the educational technology sector, the Aakash has a
little presence. The collaboration came about because BYJU’S hasn't received regular
classroom coaching in a long time, whereas Aakash has a strong presence there. In the school
education sector, BYJU’S has a grip, whereas Aakash is the market leader in competitive
exams. The firms amalgamated to take advantage of this cross-segment diversity.
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Existing Byju subscribers, especially those in grades 9-12, may enrol in AESL's core entrance
exam courses right now, thus strengthening the platform's stickiness. As a consequence of the
relationship with BYJU’S, Aakash Educational Services will be able to offer online learning
to its services. "Physical centres are usually packed, and classes may linger for hours, giving
students annoyance," according to experts. "These issues may now be alleviated when their
courses become hybrid."
“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.
The pandemic has brought the importance of the blended format of learning to the forefront,”
Byju Raveendran, founder & CEO, BYJU’S said in a statement BYJU’S raised around $460
million in new fundraising this week after raising more than $1 billion from investors last year.
In a transaction potentially more than $100 million, the Bengaluru-based company is in
discussions to purchase rival Toppr. Last year, the company paid $300 million for WhiteHat
Jr.
According to estimates, BYJU’S has 80 million registered users and 5.5 million subscribers.
"It managed to recruit 45 million additional pupils to its platform in just 6 months during the
shutdown," experts noted. The collaboration with BYJU’S, according to Aakash Chaudhry,
MD of AESL, would help the firm to reach a wider audience. Medical and IIT students
typically begin improving their talents in grades 8-10. "That is where BYJU’S presence is
strong, and we will get greater visibility." According to Chaudhry, Aakash's existence is now
confined to about 215 test prep centres.
In terms of financial performance, Aakash has been a standout, with consistently increasing
EBITDA margins and sales growth. This should boost BYJU’S cash flow in the short term,
according to Atit Danak, principal and head of CoNXTat Zinnov.
According to a recent EY-IVCA study, the Indian ed-tech industry would expand 3.7 times in
the next five years, from $2.8 billion in 2020 to $10.4 billion in 2025. The category will have
around 37 million paying customers by 2025. The transaction is designed as a strategic merger,
with the proceeds going toward expanding Aakash's educational programmes. The deal is
valued at $ 1 billion in cash and shares, according to sources.

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The company has been busy recently acquiring cash from various sources, most likely to fund
this deal.
BYJU’S is venturing into the offline world for the first time. The major reason for this is self-
evident. In the school education sector, BYJU’S is the market leader, while in the competitive
sector, Aakash is the market leader. To take advantage of this cross-sector diversification, the
partnership was formed.
The company's founders, Aakash JC Chaudhary and Aakash Chaudhary, will continue to drive
the company's growth. Blackstone, the institute's prior investors, would later become BYJU’S
stockholders alongside them. Blackstone controls 37.5 percent of the firm, valued at Rs1350
crore. In addition, the founders stated that "By uniting the two organisations, students would
benefit from "very extensive and value-added services." Those who requested it have had
access to the real classroom. Others who wanted to access material and study online have also
been helped by BYJU’S. We will present students with a one-of-a-kind experience by
combining our physical location, technology, and online learning."

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 POST PURCHASE DECISION
After being bought by BYJU’S for $1 billion earlier this year, Aakash Educational Services
(AESL) is transforming into a hybrid edtech company and rapidly growing across the country.
AESL will launch 106 new centres around the country in the next five months. In these sites,
there will be a mix of extension and freestanding centres. J C Chaudhry founded AESL in
Ganesh Nagar, West Delhi, in 1988 as a small private coaching institute. Aakash has expanded
from 12 students in 1988 to over 250,000 students in 215 centres. The target is to have roughly
5 lakh pupils by the end of this year.
"Hybrid learning is the future, and test preparation is an important aspect of India's education
system." According to Abhishek Maheshwari, AESL's chief executive officer, the future
answer would be a combination of (physical) and (digital) classrooms (CEO). "Now it was just
a matter of speeding up the process because we had all of the foundations in place." Now that
Byju has come, things are picking up even faster."
AESL's test preparation services may be beneficial to students preparing for medical and
engineering admission exams, school and board exams, KVPY, NTSE, Olympiads, and other
foundation-level tests. The institute, according to sources, has an annual revenue of roughly Rs
1,200 crore. AESL intends to hire around 2000 new employees this year, with a headcount of
over 5000 people. This is part of the company's offline or physical centre growth plan, as well
as a response to rising demand at its current facilities.
AESL is increasing its scope and foraying into Bharat by creating centres in Tier 3 and 4 cities.
This helps it to become closer to its customers, giving students the opportunity to learn without
having to go to larger cities.
"Previously, students would go to places like Delhi, Kota, and Hyderabad. The demand for
physical centres in Tier-3 and Tier-4 markets has increased, according to Aakash Chaudhry,
managing director of AESL. "We're adding over 100 new centres, with more than half of them
opening in Tier 3 and Tier 4 cities." We'll be bringing a lot of technology with us as well."
Physical classroom instruction, according to Chaudhry, a Harvard Business School graduate,
will continue to operate as it has in the past. This is because students are returning to traditional
classrooms after studying online for more than a year. "I feel this confirms our commitment to
growing both the physical and online aspects of our company."
The additional centres will help the organisation to increase its teacher-student interaction as
well as its market reach. This would also help the firm to set a higher standard for the test
preparation sector. This involves incorporating new technologies in both a digital and physical
setting to make learning more user-friendly for pupils.
The usage of online education has expanded as a result of the coronavirus epidemic, and AESL
is witnessing increasing demand across the country. Students and professionals are working to
enhance their skills while schools and businesses are closed. It's vying for a share of the
country's $180 billion education industry, which has gone online to adapt to the new reality,
versus new and old education establishments.
Maheshwari, who became CEO of AESL in November of last year, is in charge of the
company's omnichannel products, which are designed to assist students accomplish their goals
while also generating profitable development. Maheshwari was formerly the head of BYJU’S
International Business, where he oversaw the company's global expansion. He was the CEO of
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Disney in India for a number of years, where he was responsible for the company's P&L,
strategy creation, and execution across all of Disney's brands, companies, and activities.
Maheshwari observes a high demand from students to attend physical classes at AESL. "There
is some (learning) weariness (online)." As a result, wherever classes are available, people want
a decent mix of both. "We followed all of the Covid guidelines," Maheshwari stated. "We are
also allowing you to attend to the classroom two days a week and study from home two days
a week."

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 MEASURES TAKEN TO OVERCOME THE CHALLENGES

Struggles and Challenges

Without addressing the problems, difficulties, and obstacles that Byju Raveendran experienced
before developing Byju into a successful online studying platform, the Byju Business Model
is incomplete. BYJU’S did not start out with all the success in its hands since the computerised
framework was still being built at the time. When they were advertising the item in 2015, they
faced significant challenges. It is currently the most widely used.
BYJU’S has completely transformed the educational software and service sector. As a result,
educational strategies and instructional practises have shifted. The Revenue Model of Byju
Learning modules for high school and college students, as well as students preparing for
entrance and competitive examinations, are available in BYJU’S app. The films include an
educator who use audio-visual strategies to help students understand tough concepts. The
lectures are usually pre-recorded, so students may download and access them whenever they
want.
On occasion, BYJU’S delivers its course curriculum online via live sessions. Subscriptions are
how Byju earns money. Byju generates revenue by charging students a monthly membership
fee for the courses it provides. Because Byju is an online platform, its material has the potential
to reach a significant number of underserved children, boosting its popularity and income. By
expanding sales, BYJU’S generates a big profit. It is one of India's most significant web-based
organisations, with a capital-productive action plan. Naspers, a $3.6 billion firm located in
South Africa, donated $540 million to the organisation in December 2018. BYJU’S reported
that the firm had made a considerable profit in the fourth quarter of 2017. BYJU’S Series F
investment round, which raised $1.5 billion, ended in March 2021.
The funds will be used for acquisitions and inorganic growth. The company is now worth $15
billion, according to the current fundraising round. Byju intends to expand in the United States,
Australia, the United Kingdom, and a few other nations with its disconnected mentorship.
BYJU’S search for a half-instructive, half-informative model that would help them manage the
exam prep environment led him to Aakash. They found a great Indian player with a wonderful
inheritance in Aakash. For a long time, they have displayed dominant results in the exam
preparation space. Aakash Educational Services Ltd (AESL) has grown from a small teaching
centre in Delhi to a Rs 1,200-crore-added-to-annual-turnover corporation.

The agreement was a long-drawn cycle that lasted more than five months of transactions. In
April of this year, BYJU’S purchased it for over $950 million. When in doubt, BYJU’S tries
to coordinate and influence every procurement. It also enjoys allowing the acquired
organisation to operate as a free substance. The purpose is to support the acquired company in
maintaining its entrepreneurial spirit and social ethos.

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How BYJU’S is addressing the issues faced by Aakash Educational Services:
1. There are still a considerable number of students who prefer the brick-and-mortar method
of instruction, and Byjus has no prior experience in this industry. Although they are working
together to create more institutes, they may face challenges due to their lack of experience.
2. The courses offered by the EdTech behemoth are out of reach for many students, particularly
those from tier 2 and tier 3 cities.
3. A huge number of pupils have trouble using the internet and its products.
4. Because the Aakash Institute did not operate in all languages in all cities, Byjus has to devise
a plan to rectify this.
5. Coming up with a good motive for the acquisition - A good way to avoid this issue in mergers
and acquisitions from happening is to spend time on strategic planning. If the organization
doesn't have a good answer to the question 'why are we doing this?' the merger or acquisition
has just run into its first problem and the chances of others arising are already higher.
6. Ensuring that the right company is being targeted - Success in acquisition is acquiring the
right firm. This may seem an obvious one, but for something which is supposedly so obvious,
thousands of companies fail to observe it when conducting mergers or acquisitions.
Overcoming this problem may require to step away from the process entirely if it don't
encounter the right company in the search.
7. Synergies should not be overestimated - To avoid overestimating synergies, conservatism is
the best approach - if the firm can make savings of a million dollars from a deal, then it may
be worth pursuing.
8. Avoiding overpayment - The most common problem that arises in mergers or acquisitions
is overpaying for companies. A good way of avoiding overpayment is by looking at a suitable
value for that firm as a limit, but not a target. This shift in thinking can end up saving you
millions of dollars and overcome the overpayment problem.
9. Protection against Exogenous risks - The challenges faced by companies in the fast-growing
field of digital and social media mean that even the most well-planned deals have to be flexible
and adaptable to change.
10. Upholding the trust of important stakeholders - Just because management is enthused about
an acquisition, it doesn't mean that the staff will be - and this goes for people at the top and
bottom alike.
11. Avoiding Inadequate due diligence - Efficiency means efficiency, not cutting corners -
there is simply no excuse for not conducting thorough due diligence. Almost everyone in an
acquisition is aware that these steps should be taken, but shortcuts are still common, therefore,
the business community still sees it as one of the most common problems faced.

12. Evidence based calculated decision making - The value of pulling the plug on a deal is
largely overlooked. There's a temptation to go ahead with a deal after a certain point, when
you've developed a good rapport with the owner of the target company or your banker is telling
you that the deal is a guaranteed winner. Avoid this issue by remembering that the reason you
conduct due diligence in the first place is to tell you what you're buying, warts and all.
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13. Successful integration after acquisition - Integration is not an optional extra and should be
seen as a branch of due diligence in its own right. Problems with acquisitions during Integration
can create an inefficient and even toxic work environment. The best way to avoid a failed
integration is to plan integration in detail before the ink has dried on the deal contract.
14. Keeping the goals of primary firm in focus - The most important thing to remember is that
the priority is your own firm. Neglecting your company's day-to-day operations in favor of
deal-making goes against the aim of what you're trying to achieve in the first place. In drawn-
out deals, managers can take their eye off the ball and miss out on value-generating
opportunities for their company.

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 FINDINGS AND RECOMMENDATIONS BASED ON THE ABOVE
ANALYSIS

Impact / Synergy: BYJU’S announced that they will branch out into offline schooling as
well. Aakash, the most well-known brand, has the most well-established infrastructure,
resulting in a larger overall client base. Aakash will also be able to go to the online phase,
where he will receive online assistance and earn financing from Byjus. Byjus' comparable
characteristics will allow them to expand their capabilities, develop individualized learning
programmes, and recruit new employees. Learning's long-term future is a mix, and this
connection will integrate the finest of both disconnected and web-based learning, as well as
mastery, to produce meaningful experiences for understudies.

Strategy Ahead: According to Byju Raveendran, the time has arrived for us to integrate
both modalities of experience. He recognizes the significance of offline learning since it targets
pupils more accurately and with greater flexibility. He also remarked that the organization is
now far from relying solely on online exam preparation approaches. This agreement will act
as a bridge between the towns and communities that have yet to be reached.
BYJU’S is currently eliminating all of its competitors and extending its domination in the
education industry. The purchase of the two enterprises would benefit India's education
industry.

BYJU’S boasts approximately 80 million students using the app, 5.5 million paid yearly
subscriptions, and an 86 percent annual renewal rate. Between April and September 2020,
BYJU’S gained 45 million new students to its platform. Other test preparation fields, such as
civil service, government, and banking examinations, as well as law and management entrance
tests, might be the next set of segments of interest for BYJU’S, and perhaps acquisitions. It is
considering going public in the next 18 to 24 months.
BYJU’S success is commendable, but it's important to remember that, at some point, online
space will no longer enough to survive. The firm changed to omnichannel mode since they
were able to understand this swiftly.
They already have 80 million users and close to 5.5 million paying clients; now that they have
a big brand attached to them, they have much more responsibility, because the stakes have
risen significantly.

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 KEY LEARNINGS
BYJU’S appears to be pursuing an inorganic growth strategy, with an eye on attractive merger
and acquisition targets that it regards as strategic fits for its growth objectives. Its acquisition
strategy appears to revolve around staying competitive, branching out into related markets,
developing better learning products, and expanding its business. BYJU’S has been seeking for
ways to expand both in India and beyond.
Of course, the payout from these buyouts has yet to materialise. It's too early to know how
BYJU’S inorganic expansion plan will work out.
BYJU’S advantage is that it has a good safety net that allows it to continue making significant
risks.
The firm is backed by several marquee global investors like Chan-Zuckerberg Initiative,
Sequoia Capital India, Silver Lake, BlackRock, Tiger Global, Tencent, Qatar Investment
Authority and more.
BYJU’S is presenting itself as the leading corporation in the education market, with access to
investment from a variety of sources, including sovereign funds. BYJU’S is adamant about not
allowing competition to hamper their expansion.
1. BYJU and Aakash Institutes partnered to provide the best of both offline and online
learning together. Students may learn online and request offline help from the company's
physical and mortar location as needed. The epidemic has brought the value of a mixed
learning approach to the fore.
2. Current BYJU’S members, especially those in grades 9-12, may enroll in AESL's core
entrance exam courses right away, boosting the platform's stickiness.
3. As a result of the transaction, the two largest companies in their respective sectors were
able to create India's largest omnichannel for students.

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 OUR GROUP ALSO DID A SURVEY ON BYJUS AND AAKASH TO
KNOW WHICH ONE IS PREFERRED AND THE RESULTS ARE
MENTIONED AS BELOW

We got the responses where people are preferring AAKASH above BYJU’S shows that it
has the good image so, by acquiring they can gain the public trust.

We got the responses that 84.4 % people said that online classes are less interactive and do
not provide the students chance to get engage with teachers and other students.

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 We got a mix response for the effectiveness of coaching in solving queries and most of the
people have voted neutral means they consider online equally as offline

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burst/
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in-india/
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worried/
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catalyst-of-indian-education-industry-1912116-2022-02-12
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