Unacademy Mulls Big Merger With Aakash

Unacademy to possibly merge with Aakash

Unacademy to possibly merger with Aakash

Unacademy is in talks regarding its possible merger with Aakash. Both of these edtechs are among India’s most valuable edtech firms.

The deal in talks is a possible concoction of cash and stocks. The entity that will be formed as the outcome of this deal may march towards an IPO (Initial Public Offering) as opposed to any one of the firms applying for the same.

The discussion is still in its nascent stage and the deal may still take some time to finalize. However, talks between the founders of the edtech firms have taken the market by storm.

The deal has not yet reached the term sheet stage. A term sheet is an important paper that charts out the terms and conditions of the deal which are non binding in nature.

The deal is aimed at providing enough liquidity to the merged entity which will put the edtech businesses in a better position to launch an IPO.

Gaurav Munjal, the founder of Unacademy, is expected to lead the merged entity with Byju holding as a prominent board member.

Unacademy mulls big merger with Aakash - Asiana Times — *Aakash to merge with Unacademy*. Source (Times Now)

These two Bengaluru based edtechs are competitors in the edtech space. They are backed by big investors which include General Atlantic, Tiger Global and Sequoia Capital. Since PhysicsWallah is becoming more capital intensive, a merger between these two competitive rivals might prove to be beneficial to them. This will also allow investors to have more options for investment in the edtech space.

Byju’s raised its last funding last year in October at $22 billion valuation. Unacademy raised its last funding at $440 million in 2021 at a valuation of 3.4 billion. Hitherto, Unacademy has raised capital in excess of $870 million with Byju’s having raised more than $5 Billion.

Aakash’s revenue this year was around ₹1400 crore. It is expected to exceed ₹2500 crore this fiscal year.A $3 billion valuation will equip the firm with a 10x revenue multiple.

Since, Aakash has an offline business model, scaling to 10x revenue multiple without a merger deal becomes a hurdle.

This possible merger is poised to add upto ₹1500 crore in the firm’s (Aakash’s) revenue. Aakash is also poised to bring huge losses of Unacademy in the books. But the merged entity will be empowered to leverage and find optimal solutions for the same.

If the merger materialises, Aakash will become the biggest edtech entity in India to have a strong command in the online and offline coaching space. Unacademy boasts about 50 million active learners. Aakash, on the other hand, features more than 2,50,000 students across 200 centers in the country.

Due to some due diligence issues, Byju’s has been facing a liquidity crunch accompanied with delay in fundraising programs. $100 Million of the deal is expected to be in cash. This cash component will empower Byju’s to tackle the liquidity problem which will also revive the world’s highest-valued edtech startup.

Aakash was acquired by Byju’s before the second wave of the pandemic. Byju’s was to pay $950 million for the cash and stock transaction.

Aakash, since then, has grown by about 50% and is still expected to grow by another 50% by this year. Byju’s has also previously been in talks about publically listing Aakash in India’s markets at three times its valuation. Moreover, Byju’s was rumoured earlier to raise $250 Million by issuing convertible bonds by the name ‘Aakash Educational Services’.