Bengaluru-based edtech unicorn Unacademy is in discussions to merge with K12 Techno Services, according to sources familiar with the matter.
K12 Techno provides management services to ICSE and CBSE curriculum schools from kindergarten to class 12 under ‘Orchid, The International School’ brand. The companies have been negotiating the terms of the merger for the past few weeks, the sources added.
The proposed deal would result in both entities owning a 50% stake each in the combined entity. Unacademy had invested in Orchids International Schools three years ago, and Peak XV Partners is a common investor in both companies. In September last year, K12 Techno’s funding round from Kedaara which saw Rs 1,300-1,500 crore coming in at an undisclosed valuation, had given PeakXV a partial exit.
The finer details of the merger, including the valuation of the combined entity, are yet to be finalised, sources said. Unacademy had previously attempted to acquire Orchids International Schools in 2021, but the deal did not materialise.
A spokesperson for K12 Techno Services declined to comment on the speculation. Unacademy did not respond to queries till the time of going to print.
Established 14 years ago, K12 Techno Services offers comprehensive education services, content, and technology solutions to over 900 educational institutions across India. The company’s portfolio includes its own brand and curriculum and technology platform, catering to ICSE and CBSE curriculum schools from kindergarten to Class XII.
According to data intelligence platform TheKredible, K12 Techno Services reported revenue of Rs 382 crore in FY23, with a loss of Rs 39 crore. The company is expected to close FY24 with revenue of Rs 450 crore and an Ebitda of nearly Rs 100 crore. Recently, Venturi Partners acquired a $27 million stake in K12 Techno Services from Navneet Learning, a subsidiary of Navneet Education.
SoftBank-backed Unacademy, on the other hand, raised its last equity round of $440 million led by Temasek in August 2021, valuing the company at $3.44 billion. During FY23, Unacademy reported a 26% increase in operating revenue to Rs 907 crore while reducing losses by nearly 40% to Rs 1,004 crore. At the beginning of the current fiscal, the company claimed to be nearing profitability at the group level. However, Unacademy has yet to file its audited financial statements for FY24.
In an interaction with FE in February, Jai Decosta, MD and CEO of K-12 Techno Services had alluded to increased outside interest in the business over the past few years.
“For the first five years we were iterating solutions, and obviously weren’t attractive to big players. Over the past few years, however, on the basis of our strong numbers and positive sentiment amongst users, we have received multiple such queries,” Decosta had said without naming the suitors.
The company had earlier this year also announced plans to launch an IPO in three to four years. However, with the merger talks advancing IPO plans could take a backseat, sources added.