Ebix Enters India’s E-Learning Market With Acquisition Of Smartclass, Plans $100 Mn Investment

ItzCash parent Ebix has acquired elearning company Smartclass, which is run under Smartclass Educational Services Private Limited. Under the terms of the agreement, Ebix will pay up to $8 Mn in cash for its stake in SmartClass.

Ebix expects the acquisition to be immediately accretive to its earnings and forecasts up to $0.20 in increased Diluted EPS, once the acquisition is fully integrated over the next six months.

Post acquisition, Smartclass will be tightly integrated into Ebix’s Education and elearning initiatives in India and is seen as one of the many steps, that Ebix intends to take with an intent to invest up to $100 Mn in the sector.

Ebix Chairman, President and CEO Robin Raina said, “The elearning business model is typically asset light and caters well to strong recurring operating margins, once the customer aggregation crosses the threshold levels. We have been eyeing India’s fast-growing elearning sector for many years now, fueled by education being one of the highest spending areas traditionally for an Indian median household.”

He further added, “Towards that extent, we have earmarked a $100 Mn amount for investment in India’s e-learning sector and the acquisition of Smartclass is a logical first step for Ebix to establish its presence in the country’s elearning markets.”

Smartclass is one of the leading elearning companies engaged in the business of education services, development of education products and the implementation of education solutions for K-12 schools in India. The company has a strength of 1,000 employees and caters to the accredited school education through rich media like 2-D, 3-D, virtual reality animation, etc.

Smartclass’s 500-strong sales and marketing staff across the country have helped create a strong growth trajectory, in terms of top line and reach, as claimed by Smartclass officials. It offers on-demand e-learning products and services on a subscription basis.

Ebix: Exploring India’s Elearning Sector

“A few years back, we started investing in the healthcare, elearning sector through our Indian subsidiary acquiring Birmingham based Oakstone LLC. Any business-like elearning where you can create an asset and sell it thousands of times, has strong possibilities of generating strong operating margins and cash flows,” said Robin.

He further believes that the strong focus of the Indian government as revealed in the recent edtech budget, the present nascent state of the country’s education infrastructure and the fast growth that high tech companies like Smartclass have experienced in India, the decision to take up a strong position in the country’s e-learning markets became an easy one for Ebix.

Divya Lal, Smartclass Chief Executive Officer said, ”We are very excited by the possibilities of growth, geographical reach and financial strength that this investment from Ebix brings to Smartclass. We look forward to becoming a part of the Ebix family and replicating Ebix’s international success over the last two decades, to build upon our existing strengths and take a leading place in India’s e-learning industry.”

Online education in India will see approximately 8x growth in the next five years, says a recent report by Google, KPMG. This will have a significant impact on the edtech market that has a potential to touch $1.96 Bn by 2021 from where it stands now i.e. $247 Mn.

The rising startup brigade in India’s online learning ecosystem include names such as BYJU’S, Unacademy, UCLID, Avagmah, Embibe, iProf, Simplilearn, Meritnation, Toppr, NeoStencil and Englishleap, among others. BYJU’s also recently gained the status of a unicorn.

Earlier this year, Ebix also acquired  Money Transfer Service Scheme (MTSS) business of Transcorp International. As per the official statement, the acquisition has been made through one of its Indian subsidiaries, EbixCash, for around $7.4 Mn. In October 2017, it also acquired Bengaluru-based omni-channel online travel and assisted ecommerce exchange, Via.com. The move was geared towards expanding Ebix’s distribution network to more than 224K outlets across Southeast Asia. How fruitful Ebix’s latest acquisition of Smartclass may prove to be in the long run, will be something to watch out for.