LEAD, an edtech unicorn, has inked an agreement with Pearson, a global publishing and learning company, to acquire its K-12 business in India as the edtech sector in the country continues to consolidate, with smaller players folding up and selling operations to larger ones.
India has about 1.5 million schools, of which a million are government run while the remaining are privately operated. Further, of the 0.5 million private schools, about 0.25 million are low-fee schools, 0.2 million are affordable and 0.05 million are high-fee ones, Sumeet Mehta, co-founder, LEAD, explained.
Mehta’s company, so far, had focused on the 0.2 million affordable schools but after acquiring Pearson’s India business, LEAD can now further tap into the 0.05 million high-fee schools as well, a segment Pearson is dominant in.
“The Pearson acquisition gives us a major leg up, after this our revenue should get at least a 40% boost while our bottom line will remain largely immune,” Mehta told FE.
While Mehta did not comment on the value of the deal, LEAD has bought Pearson’s India operations for about Rs 150 crore, sources aware of the transaction told FE. The deal would close in a few weeks, they added.
With the latest acquisition, LEAD will also immediately expand its reach to over 9,000 schools while it continues to scout for more companies that will help it capture the entire spectrum of over 0.5 million private schools in India.
“After Pearson, we’re also looking for more players that will help us reach the other segments in the private education space. We’re open to acquiring startups which help us achieve that,” Mehta said. “The India edtech story is a school-centric edtech story and should not be seen as a B2C industry where companies try to circumvent schools and teach students separately online, that is not the way to go about it,” he added.
After the pandemic has shown signs of waning, the edtech industry is recalibrating its strategy, reducing costs and moving to a hybrid model of teaching. The restructuring moves have seen at least 8,000 edtech employees being sacked in 2022 alone. Mehta however assured there won’t be any layoffs once the acquisition is complete — a cost reduction exercise typically seen after an M&A, especially in the edtech space. Pearson’s entire 150-member team in India, across content and product, will move to LEAD’s payroll, Mehta said.
LEAD was founded by Mehta and Smita Deorah and has raised $170 million till date from GSV Ventures and Elevar Equity, among others and is valued at $1 billion.