Edtech Startup Veranda To Acquire Tapasya Educational Institutions For INR 362 Cr

Veranda Learning Solutions, the edtech venture of Kalpathi Group, is acquiring educational services provider Tapasya Educational Institutions Private Limited for at least INR 362 Cr (around $44 Mn).

Founded in 2009, Tapasya operates 19 inter/PU colleges and 10 degree colleges in Telangana and Karnataka. It is expected to post a revenue of INR 65 Cr and an EBITDA of INR 26 Cr in FY24.

Veranda XL Learning Solutions Pvt Ltd, the wholly-owned subsidiary of Veranda Learning Solutions, will buy Hyderabad-based Tapasya in three tranches. 

In the first leg, Veranda will acquire 50% stake in Tapasya for INR 120 Cr by March 31, and a 1% stake in the second leg for INR 2.40 Cr in April, the company said in a filing on Friday (January 12).

Chennai-based Veranda will pick up the remaining stake in early 2028. The amount payable will depend on Tapasya’s performance in 2027, with a floor price of INR 240 Cr. It will also pay an additional amount based on the cash flows of Tapasya from FY24 and up to the date of the third tranche.

With this acquisition, Veranda is looking to strengthen its ecosystem by providing additional options in the commerce higher education space.

Founded in 2018, Veranda is a publicly listed company that offers test prep for several subjects such as government exams (state and national administrative services), banking, insurance, railways and more. 

Besides, it also offers certificate-based professional skilling and upskilling programmes in new-age technologies such as coding, data science and more. 

It made its stock exchange debut in 2022 and bought nearly seven businesses last year for a total of INR 400 Cr.

The startup offers services through a host of brands, including Veranda RACE, Veranda IAS, Edureka, Six Phrase, Veranda HigherEd, SmartBridge, Talent Academy and Publications, and Sreedhar’s CCE. 

In the September quarter, the startup’s consolidated net loss declined to INR 1.53 Cr from INR 21.12 Cr in the same period the previous year. Meanwhile, operating revenue tripled to INR 98.37 Cr during the quarter from INR 36.88 Cr a year ago. 

The latest development comes at a time when the ongoing funding winter has wreaked havoc in the country’s edtech ecosystem. The funding raised by Indian edtech startups declined to a mere $267 Mn in 2023 from $2.4 Bn in 2022 and $4.8 Bn in 2021.

The capital drought has resulted in widespread layoffs and a consolidation wave in the edtech ecosystem. According to Inc42 data, Indian edtech startups have laid off nearly 15,000 employees since the start of the funding winter last year.