Education Markets and Deals Roundup — 15th Edition
The education sector is experiencing significant activity across public and private markets. Notable developments include Duolingo’s user growth and AI features, IDP Education’s record revenue, and PowerSchool’s acquisition by Bain Capital.
In the Indian market, CL Educate acquired NSEIT’s digital exam assessment business, while Physics Wallah raised $210 million at a $2.8 billion valuation. Vedantu secured funding and is acquiring Pedagogy, while Adda247 acquired PrepInsta to expand into the skilling space.
Companies are focusing on AI integration, addressing skills gaps, and expanding their service offerings. The sector continues to attract substantial investments and strategic acquisitions, reflecting its growth potential and evolving market demands.
I. Public Markets
Market Multiples Snapshot — Global and Indian Education (Source: Koyfin)
US listed Chinese education stocks majorly TAL Education Group and New Oriental Education Group has surged post announcement of a new policy focusing on employment and education integration. The new policy of China aims to integrate vocational and regular educational systems, promote industry-education collaboration, and foster scientific and educational connections to cultivate more high-quality technical skills.
1. B2C — Global Education
B2C — Global Listed Players Comps
Rapid Round-up
Duolingo reported Q2 monthly active users exceeding 100 million (up 40% YoY) and daily active users reaching 34.1 million (up 59% YoY). At Duocon 2024, the company unveiled AI-powered features including video call for language practice and adventures mini-games. Duolingo expanded its music education offerings through partnerships with Loog, launching a portable piano, and integrating popular songs into its music course via integration with Sony music. It showcases how education sector related companies are trying to curate a basket of products which are AI driven and more profitable in nature.IDP Education reported FY24 results with record revenue of $1,037 million (up 6% YoY) and adjusted EBIT of $239 million (up 4% YoY). Student placement volumes grew 17% to 98,900, outperforming the broader industry. Some of the key strategic highlights delivered in FY24 include integrating Intake Education’s 27 offices, increasing FastLane offers by 83%, launching a new student ambassador solution, improving Student NPS, adding 50 new higher education clients, and expanding IELTS One Skill Retake acceptance. This enables horizontal integration of products which helps in the expansion of the business.New Oriental Education & Technology Group announced a special cash dividend of $0.06 per common share, totaling approximately $100 million. Also, Point72 Hong Kong Ltd increased its stake in New Oriental Education & Technology Group by 16.6% in Q2, now owning 1,380,199 shares valued at $10.7 crores making it their second-biggest holding at 6.4% of their portfolio. It portrays the rising level of investor confidence edtech sector.Hippocratic AI and Adtalem Global Education partnered to develop AI training materials for healthcare clinicians. The collaboration aims to integrate nurses practical experience with AI capabilities, creating a curriculum for Chamberlain University and Walden University. The program, expected to launch in Spring 2025, will cover AI applications in nursing, ethical considerations, and regulatory aspects, with students earning a certification upon completion.In a strategic move to better serve its growing international user base, Udemy is opening its 10th regional hub in Mexico City. However, Udemy is also navigating challenges in the current business climate. The company recently announced a significant restructuring, including layoffs of 280 staff members. As part of this reorganization, Udemy plans to rehire for some positions in lower-cost regions, aiming to optimize operations and maintain competitiveness while managing costs. It can help the company to optimize its fixed cost for the upcoming months considering the unrest in the macro-economic conditions.
2. B2B — Global Education
B2B — Global Listed Players Comps
Rapid Round-up
Pearson is making significant strides in addressing the growing demand for AI-related skills. The company has expanded its partnership with Degreed to help organizations adapt their workforce skills in the rapidly evolving AI landscape. In collaboration with AI training platform Mindstone, Pearson has also launched a Generative AI Foundations Certification. This program, targeting both professionals and students, would cover AI fundamentals, ethical guidelines, risk management, and practical applications, addressing the critical need for AI proficiency in the global workforce.PowerSchool, leading provider of cloud-based software for K-12 education, has been acquired by Bain Capital in a deal valuing the company at approximately $5.6 billion. Following this acquisition, PowerSchool has delisted from the New York Stock Exchange and will continue operations as a private company. Notably, Vista Equity Partners and Onex Partners have retained minority investments in PowerSchool, signaling continued confidence in the company’s prospects. The acquisition is expected to grow significant opportunities as the demand for K-12 educational technology expands with time.Instructure, the company behind the popular Canvas LMS, is placing a strong emphasis on mental health support in education. The company has introduced a free integration of Microsoft Reflect into Canvas, aiming to enhance mental wellness support for students and educators. According to WHO, 3.6 percent of children aged 10 to 14 and 4.6 percent of those aged 15 to 19 have been reported to suffer from anxiety. Accordingly, Instructure has launched a Mental Wellness Hub within its Community, serving as a comprehensive resource for over 2.25 million educators and learners.Skillsoft Corp has introduced groundbreaking features to enhance its learning platform. These include Certification Paths for streamlined professional development and AI-powered tools such as Smart Content Discovery, Personalized Coaching, and a Coding Assistant. It has also implemented a functional skills taxonomy and Role Advisor to deliver more personalized learning experiences, along with detailed skill reports to improve talent management. These events had impact on the stock thereby leading to an upward rising stock curve in the month of October 2024.Lincoln Educational Services Corporation has introduced new Air Conditioning, Refrigeration and Heating Systems (HVAC) Technology and Electrical and Electronic Systems Technology (EEST) career training programs at its Moorestown, NJ campus. These programs are designed to address the significant skills gap in these industries, with over 30,000 job openings projected across the state.Wiley has been continuously expanding the product portfolio and plans to launch six new Advanced titles in key health and life sciences fields by the end of 2026 to expand its Advanced portfolio. In addition, the company is deepening its reach in the physical sciences, with a particular focus on chemistry and artificial intelligence (AI).
3. Indian Education
Indian Listed Education Players Comps
Rapid Round-Up
CL Educate Limited has approved the acquisition of NSEIT Limited’s Digital Exam Assessment (DEX) business for an initial consideration of ₹230 crores, with potential for an additional ₹75 crores based on business performance. This acquisition can position CL Educate to become a major player in the digital assessment market, as NSEIT DEX is currently the second-largest assessment company in India.Navneet Education has offered buyback of shares opportunities representing 2.21% of equity shares at a price of INR 200 per share for an aggregate consideration not exceeding INR 100 crores.
II. Private Markets
Equity Financing Snapshot — Indian Education (Source: Tracxn)
Funding Round-Up
Physics Wallah, an edtech unicorn, has raised $210 million in a Series B round led by Hornbill Capital, with participation from Lightspeed Venture Partners and existing investors GSV and WestBridge. This round values the company at $2.8 billion, a significant increase from its previous valuation of $1.1 billion in June 2022. This is the largest fund raised by an Indian edtech in the last two years, bringing Physics Wallah’s total funding to over $310 million. The company is also expected to go for an initial public offering in 2025 thereby unlocking value for the existing investors.Vedantu has secured $2.09 million in debt and $0.21 million in equity from Stride Ventures in a Series E round. This is the company’s first funding since raising $100 million at a valuation of around $1.1 billion. Vedantu is also set to fully acquire Ahmedabad-based Pedagogy by purchasing the remaining 9.32% stake in a share swap deal, issuing 87,198 equity shares worth Rs 1.53 crore to Pedagogy’s co-founders. This will strengthen the former’s presence in the hyper-competitive test preparation segment currently dominated by Unacademy.Rocket Learning Foundation, part of the 100x Impact Accelerator’s inaugural cohort, has won Google’s AI for Global Goals award. They will receive $1.5 million in grant funding and additional support from Google.org to advance their mission of ensuring pre-literacy and pre-numeracy skills for 50 million children in the next five years. The foundation plans to use AI and machine learning to drive behavior change among parents and educators in low-income communities.M&A Deals Snapshot — Indian Education (Source: Tracxn)
M&A Round-Up
Adda247, a Gurugram-based edtech company, has acquired PrepInsta, marking its first inorganic move into the skilling space. While the terms of the deal were not disclosed, this acquisition represents Adda247’s strategic expansion from its original focus on test-prep to addressing the growing demand for closing the gap between learners’ skills and industry needs. This move follows Adda247’s appointment of Bimaljeet Singh Bhasin to lead their skilling and higher education division, indicating the company’s commitment to growth and expansion in these areas.
LoEstro Advisors is an investment banking firm specializing in sell-side fundraise and M&A advisory, along with a strong consulting arm.
Over the last four years, we have grown to be one of India’s largest (in terms of M&A transactions) homegrown boutique investment banks, with $1billion + worth of combined deals closed across education, healthcare, consumer, and technology sectors.
