Veranda Learning Acquires Coaching Institute JK Shah Classes For INR 337.82 Cr

NSE-listed edtech giant Veranda Learning Solutions’ wholly-owned subsidiary (Veranda XL Learning Solutions Pvt Ltd) has acquired coaching institute JK Shah Classes in a cash, debt and equity mix deal.

According to its regulatory filings, Veranda Learning will complete the transaction in two phases. The first phase will mark the payment of 76% of the outstanding capital for INR 337.82 Cr. The entire transaction will be funded through a combination of debt and equity. 

With this, Veranda joins the ranks of BYJU’S and Unacademy venturing into the offline education sector. Previously, BYJU’S had acquired test prep giant Aakash Institute in a $1 Bn deal and Unacademy had launched Unacademy Centres in a bid to cater to the IIT-JEE and NEET students.

Veranda acquired JK Shah Classes is a pioneer within the CA, CS, CMA, ACCA and CFA coaching. Founded in 1983, the institution has been operational within the commerce test prep with a strength of 75 centres located across 39 Indian cities. 

It claims to have 90K+ students across these courses every year and has over 2,000 all-India ranker holders among its alumni in just the past two decades.

The acquirer, Veranda Learning is a new-age edtech startup founded in 2018 by the Kalpathi AGS Group. It offers test prep in 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. 

JK Shah’s acquisition is the third such purchase by the edtech giant in the last 12 months. In September 2021, the startup acquired edtech Edureka which provided live online classes for upskilling programs for working professionals. After that, in April 2022, it acquired test prep giant T.I.M.E to foray into MBA, NEET and JEE test-prep segments.

“We believe that with Veranda’s strength and technological capabilities coupled with JK Shah Classes’ strong brand recognition and legacy, we will both reach greater heights in the coming years…along with strengthening their online and hybrid offerings,” Kalpathi S. Suresh, chairman and executive director, Veranda Learning Solutions said in a statement.

Following the acquisition, founder and professor JK Shah will continue to remain as chairman for life on the board and CA Pooja Shah and CA Vishal Shah will continue to lead the day-to-day operations as chief operating officers.

Edtechs Moving Towards Hybrid Model

Edtech had seen a boom in 2020, and the tides shifted to layoffs and cutbacks in 2022. The fortune of edtech startups turned in no time and while deep-pocketed startups such as Unacademy, BYJU’S moved towards spreading their business horizontally, the likes of Lido Learning, Crejo.Fun, Udayy, SuperLearn shut their business operations.

One of the most hit sub-sectors within edtech is the test prep segment. As schools, colleges and offline institutions opened up, plagued by the Zoom-fatigue, students flocked back to normalcy.

The funding within these companies also dried up. According to Inc42 estimates, in the first half of 2022, the edtech sector raised a total of $2.1 Bn, less than half of what was raised in the preceding six-month period (or the second half of 2021). In fact, the largest funding in the segment was BYJU’S $800 Mn round. 

But that’s not it. Challenges including lack of profitability, heavy customer acquisition costs and high valuations have made investors wary of backing edtech startups in the past year. 

Thus, these startups are revamping their business models, as the target market of test prep startups is going back to the offline model. Where BYJU’S and Veranda have acquired mavericks of the industry, Unacademy has launched its own centres.