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Exclusive: Unacademy in talks to merge with Orchid schools owner K12 Techno

EntrackrEntrackr · 1y ago
Exclusive: Unacademy in talks to merge with Orchid schools owner K12 Techno
Medial

Edtech unicorn Unacademy is in discussion to merge with K12 Techno, which runs the chain of Orchids International Schools, three sources told Entrackr. This would be the first major consolidation in the edtech space which has been witnessing funding drought in the past two years. “The two companies have been discussing the terms of the merger for the last four weeks,” said one of the sources requesting anonymity. “If the merger gets through, both companies will own 50% each in the joint entity.” It’s worth noting that Unacademy made an investment in Orchid School (K12 Techno) three years ago, and Peak XV is a common investor in both companies. Sources assert that Unacademy also wanted to acquire Orchid School in 2021, but the discussions didn’t materialize. Queries sent to Unacademy and Orchid Schools remain unanswered until publication of this story. We will update the story in case they respond. The 14-year-old K12 Techno provides full stack education, content, and technology services to more than 900 educational institutions across the country through a combination of its own brand, and curriculum and technology platform. It provides management services to ICSE and CBSE curriculum schools from kindergarten to class X-XII, based in metros like Bengaluru, Mumbai, Gurugram and many mid-sized cities under the ‘Orchid’ brand. According to startup data intelligence platform TheKredible, K12 Techno registered Rs 382 crore in revenue in FY23 with Rs 39 crore loss. The firm expected to close FY24 with Rs 450 crore with EBITDA of nearly Rs 100 crore. Recently, Venturi Partners purchased a $27 million worth stake in K12 Techno Services from Navneet Learning LLP, subsidiary of Navneet Education Limited. Softbank-backed Unacademy raised its last equity round of $440 million led by Temasek at a valuation of $3.44 billion in August 2021. ​During fiscal year FY23, Unacademy saw a 26% jump in its operating revenue to Rs 907 crore while controlling losses by nearly 40% to Rs 1,004 core. In the beginning of FY24, the company also claimed that it was close to profitability at the group level. The firm is yet to file its audited financial statements for FY24.

upGrad–Unacademy deal called off over valuation differences

EntrackrEntrackr · 3d ago
upGrad–Unacademy deal called off over valuation differences
Medial

upGrad–Unacademy deal called off over valuation differences Confirming the development, Ronnie Screwvala, co-founder of upGrad, told Entrackr, “Yes, we are not proceeding due to valuation differences." The much-speculated acquisition talks between online higher education platform upGrad and test-prep major Unacademy have been called off after both parties failed to reach a consensus on valuation, according to sources aware of the matter. While we cannot comment on specific numbers, it is fair to say that we were unable to arrive at a mutually agreeable valuation. Entrackr had earlier reported that upGrad and Unacademy were engaged in merger and acquisition discussions as consolidation accelerates across India’s edtech sector. The talks drew attention at a time when Unacademy was navigating internal restructuring, implementing cost-rationalisation measures, and sharpening its focus on its core test-preparation business. In recent months, Gaurav Munjal, co-founder and CEO of Unacademy, had publicly acknowledged that the company was exploring various strategic options, including fundraising and potential M&A transactions, while maintaining that no decision had been finalised. Munjal had also clarified the company’s position on employee stock option (ESOP) exercises and valuation expectations, amid questions around internal liquidity and employee compensation. Separately, Unacademy has put on hold proposed amendments to its 2018 ESOS scheme following strong pushback from former employees. The objections were primarily linked to the tax implications and liquidity concerns associated with exercising stock options at a significantly lower valuation compared to earlier rounds. Unacademy has yet to comment officially on the stalled merger talks. Founded in 2015, Unacademy has raised over $800 million from investors including SoftBank, General Atlantic, and Tiger Global, and was last valued at around $3.4 billion during the peak of the edtech funding cycle. However, like several peers in the sector, the company has faced pressure to recalibrate growth expectations amid a prolonged funding slowdown. upGrad, which operates across higher education, upskilling, and overseas education segments, has previously pursued selective acquisitions to strengthen its portfolio.

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