Blackstone buys into test prep firm Aakash Educational

By Debjyoti Roy

  • 30 Oct 2019
Blackstone buys into test prep firm Aakash Educational
Credit: Reuters

Blackstone Group Inc., the world’s largest private equity firm, has invested in Aakash Educational Services Ltd, one of India’s largest providers of medical and engineering test preparation services.

The investment is part of Blackstone’s aim to build India’s largest digitally enabled, omni-channel education company through Aakash Educational, according to a press statement. It didn’t disclose any financial details.

“Live tutoring, whether in physical or online classrooms, has proven to be an effective model globally for delivering consistent results in standardized tests,” said Amit Dixit, head of India private equity at Blackstone.


VCCircle had first reported Blackstone’s plan to buy a stake in Aakash Educational in August.

A person familiar with the matter had earlier told VCCircle that Blackstone was set to invest $200-300 million (Rs 1,415-2,120 crore) and pick up around 40% stake in the Indian company. But another person privy to the development said the deal value could be almost double this level. However, it couldn’t be independently verified.

Aakash Educational has a network of more than 200 centres across 130 cities, teaching more than 250,000 students, along with a fast-growing digital business.


“As we embark on the next trajectory of growth, Blackstone will complement our team with its deep expertise and network in the education sector globally and a team of highly accomplished professionals with a proven track record of creating value,” said Aakash Chaudhry, CEO at Aakash Educational.

Blackstone’s India bets

The investment in Aakash Educational is the PE firm’s fourth new deal in India this year outside the real estate sector. The real estate sector has been the main driver of Blackstone’s India dealmaking activity over the past few years. Outside of real estate, it was doing one deal a year on an average across its different business units.


This year, it sealed three deals outside the real estate sector before Aakash—Aadhar Housing Finance Ltd, Essel Propack Ltd and Future Lifestyle. The Future Lifestyle transaction was struck by its Tactical Opportunities, or Tac Opps, unit.

Blackstone was last as active almost a decade ago when it was doing smaller deals in India.



The company provides test preparatory services to Class 10+2 students looking to study medicine and engineering. It also offers foundation courses (covering school boards and junior competitive exams) for Class 8-10 students. These offerings are categorised under three brands – Aakash Medical, Aakash IIT-JEE and Aakash Foundations.

The company uses classroom-based coaching as well as digital and distance learning methods. It had 193,313 students as on March 2018 and employed 1,969 faculty members.

Aakash Educational opened its first centre in 1988. Since then, it has opened 170 centres across 103 cities in 23 states and union territories. Of those, 67 outlets are through a franchisee model that allows it asset-light expansion into newer regions such as east India, as per the documents it filed last year for an initial public offering.


The company had filed its draft IPO proposal in July last year. The IPO size was estimated to be around Rs 1,000 crore. It got approval from the Securities and Exchange Board of India in September last year. That approval lapsed last month, and it is now unlikely to go ahead with the IPO immediately in light of the deal with Blackstone.

The company reported a net profit of Rs 160.18 crore for the financial year 2017-18 on revenue of Rs 973.33 crore. Its net profit has risen at a compound annual rate of 33.4% between 2013-14 and 2017-2018 while its revenue has grown at an annualised pace of 24.3% in the five-year period.

Other test-prep peers

Aakash Educational’s plan to go public was to be a harbinger for other peers such as private equity-backed FIIT JEE Ltd and Resonance EduVentures Ltd to launch IPOs.

Gaja Capital-backed CL Educate went public with a Rs 239-crore IPO in March 2017, five years after MT Educare Ltd launched a Rs 35-crore public offering. Both IPOs saw massive demand from the public at large, but had a weak listing and have performed in similar vein thereafter as well.

The one segment within education services that’s roaring in India is online education. Indeed, several ed-tech platforms have attracted PE and VC investors in recent months.

At the top of the heap is ed-tech unicorn Byju’s, which crossed $5 billion in valuation after it raised $150 million led by Qatar Investment Authority in July.

In June, Unacademy, an ed-tech platform for competitive exams, raised $50 million in a Series D funding round from Steadview Capital, Sequoia Capital, Nexus Venture Partners, Blume Ventures and others.

Last year, Mumbai-based Toppr Technologies Pvt. Ltd raised $35 million in a Series C funding round from new and existing investors.

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