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Thoughts on the Byju's - Aakash (ongoing) M&A.
Hearing though the price may be a bit lower — more like 2x of what Blackstone came in at in ’19. https://economictimes.indiatimes.com/tech/startups/byjus-signs-billion-dollar-deal-to-acquire-aakash-educational-services/articleshow/80236711.cms
Thoughts on the Byju's - Aakash (ongoing) M&A.
Hearing though the price may be a bit lower — more like 2x of what Blackstone came in at in ’19. https://economictimes.indiatimes.com/tech/startups/byjus-signs-billion-dollar-deal-to-acquire-aakash-educational-services/articleshow/80236711.cms
First, some trivia. The founder-promoter of Aakash, Mr JC Chaudhry, is a big numerology buff. All employees are selected only after they pass through / clear the numerology hoop . So much for being a science teacher
AESL - made ₹~1215crs edu rev FY20 - ₹~900crs fm own centres (offline), ₹~170crs franchisee (pure profit), and ~50crs online.
80-85% of this is medical (NEET). Not strong in Engg test prep.
80-85% of this is medical (NEET). Not strong in Engg test prep.
Aakash online rev (live test prep) will 2x to ₹~100crs or so this yr. Impressive growth. A key theme of COVID has been offline players quickly developing online muscle (Walmart, Target in US), and we see that here too w Aakash.
Overall, Aakash rev will fall by just ~50-100crs in FY21, says an observer, despite the COVID turmoil. Saved largely because of overhang of 2yr contracts. But next yr, Aakash rev could could fall by ₹200-300crs so the observer says, sparked by offline drop in signups this yr.
Now the raison d’etre for the deal.
Byju is strong on tuition, and up to Class X. They are not strong on live or test prep.
By buying Aakash, Byju’s gets
- Class 11-12th content
- Test prep muscle
- Live class prowess
Byju is strong on tuition, and up to Class X. They are not strong on live or test prep.
By buying Aakash, Byju’s gets
- Class 11-12th content
- Test prep muscle
- Live class prowess
Test Prep muscle here means - awareness of last 5-10yrs papers, split of every subject into 2-3k microconcepts, understanding of which microconcepts are testing-relevant, creation of question banks for each of these microconcepts ranked by difficulty levels (adaptive) etc.
No easy way to build this for Byju’s. With Aakash M&A they get access to this.
Unacademy (UA) builds this muscle by on boarding teachers who bring this awareness + knowledge as they join UA. Plus, test prep is built into UA’s DNA, unlike Byju’s which is more tuition-centric.
Unacademy (UA) builds this muscle by on boarding teachers who bring this awareness + knowledge as they join UA. Plus, test prep is built into UA’s DNA, unlike Byju’s which is more tuition-centric.
UA is also v strong on live classes.
Byju’s began as selling content on tablets, and this asynchronous mode is baked into their DNA. Aakash’s online play will help them here.
Byju’s began as selling content on tablets, and this asynchronous mode is baked into their DNA. Aakash’s online play will help them here.
A quick look at related aspects.
The Chaudhry’s are happy to exit, & this is what the first set of pronouncements said.
But many teachers / franchisee owners may not stick around if they leave. They are loyal to Mr JC Chaudhry especially.
Hence this. https://timesofindia.indiatimes.com/business/india-business/aakash-edu-says-founders-to-continue-post-partnership-with-byjus/articleshow/80252943.cms
The Chaudhry’s are happy to exit, & this is what the first set of pronouncements said.
But many teachers / franchisee owners may not stick around if they leave. They are loyal to Mr JC Chaudhry especially.
Hence this. https://timesofindia.indiatimes.com/business/india-business/aakash-edu-says-founders-to-continue-post-partnership-with-byjus/articleshow/80252943.cms
M&A friction could be an opportunity for UA, Vedantu to pick these teachers off.
In fact an expert I spoke to, said that while the deal makes strategic sense for both - integrating would have challenges given big DNA differences.
In fact an expert I spoke to, said that while the deal makes strategic sense for both - integrating would have challenges given big DNA differences.
Fin.
