Veranda Learning Solutions Ltd, the edtech venture of Chennai-based Kalpathi Group, has signed a pact to acquire equity shares of CA test prep platform J K Shah Education Pvt. Ltd for Rs 337.82 crore ($41 million) in a mix of debt and equity.
The acquisition will be carried out in two phases. The first tranche will include payment for 76% of outstanding capital for Rs 337.8 crore. Veranda expects to complete this transaction by January 2023. The second tranche will involve acquisition of the remaining 24% stake in JK Shah at a valuation of 9.5x FY25-26 Ebitda. The second tranche is expected to conclude by November 2025.
Shares of Veranda Learning traded at a discount of 3.2% at Rs 335.60 apiece on BSE in mid-day trade on Thursday.
This acquisition comes after Veranda bought test prep institute T.I.M.E. for Rs 287 crore in April earlier this year.
Founded in 1983, J K Shah Classes is a test prep platform which provides classes in chartered accountancy, company secretary and cost and management accountancy. At present, it has 75 centres across 39 Indian cities.
“This will allow us to leverage their technological prowess and deep network to further strengthen J. K. Shah Classes’ network and offerings. The J K Shah Classes brand has been an icon for quality coaching for nearly 39 years, and will continue to change the lives of future generations of students. This is a step forward in our journey and will help us provide offerings across different modalities,” said JK Shah.
Veranda Learning was floated by The Kalpathi Group which has interests in sectors such as software services and entertainment. Its founders, Suresh Kalpathi, Kalpathi S Aghoram and Kalpathi S Ganesh had set up SSI Ltd in the 1990s, which later acquired Aptech.
“This acquisition is a crucial breakthrough into high-demand courses such as CA, as well as, a bouquet of financial and commerce courses…Veranda will leverage its expertise to establish J. K. Shah Classes’ presence in the South, North and East of India, along with strengthening their online and hybrid offerings,” said Suresh Kalpathi.
The dearth of funding in 2022 follows two golden years for edtech startups. In 2021, investors pumped $4.7 billion into edtech platforms while 2020 saw startups raising about $2.2 billion. However, the space is also booming with new acquisitions.
Last week, listed pure-play internet player Info Edge acquired a majority stake in Delhi-based online learning platform Coding Ninjas for a cash consideration of Rs 135.4 crore.
In September, upskilling unicorn upGrad Education Pvt. Ltd bought New Delhi-based learning solutions platform Centum Learning in a share-swap deal.
In another deal, PhysicsWallah, backed by marquee investors like Westbridge and GSV Ventures, acquired Jaipur-based doubt-solving and resource management startup, FreeCo for an undisclosed amount.
