New Delhi, March 16 -- Edtech firm upGrad, which was co-founded by media entrepreneur Ronnie Screwvala and counts Singapore's Temasek among its investors, has signed a term sheet to acquire its peer Unacademy in an all-stock deal.
Mumbai-based upGrad and Bengaluru-headquartered Unacademy, which also counts Temasek as an investor, didn't disclose any financial terms of the transaction.
"Neither side will disclose the valuation until closing, when the papers are filed and the transaction becomes public," Unacademy co-founder and CEO Gaurav Munjal said in a social media post.
At its peak, Unacademy was valued around $3.44 billion in August 2021 when it raised $440 million in a round led by Temasek. This has plummeted significantly since then. On the other hand, upGrad was valued around $2.25 billion in 2022.
The deal opens an exit window for Unacademy's other investors, which include SoftBank Vision Fund 2, Tiger Global Management, and General Atlantic.
upGrad counts Temasek, International Finance Corporation, ETS Global, Kaizen Management Advisors and Bodhi Tree Systems (a joint venture of James Murdoch and Uday Shankar) among its investors.
The development comes more than two months after negotiations between the two companies stalled in January due to valuation differences. The deal includes a break fee if the transaction does not close. Further, Munjal will be staying back as Unacademy's co-founder and chief executive.
"I will be staying back as co-founder and CEO [of] Unacademy-with the goal to build great online products for learners in India and globally," he said.
Unacademy, founded in 2015, provides an online learning platform specializing in preparation for competitive exams for public services, medical, management and engineering colleges. The company has raised funds from many local and global venture capital and private equity firms, and sovereign investors across multiple rounds.
In the last few years, the company has undergone a lot of changes in order to cut costs, including exiting its company-operated offline centres. These are now operated by franchise partners.
"Unacademy helped invent the Modern EdTech Playbook [sic]. Along the way we lost some focus and market share, and the sector itself has not seen enough real product innovation in recent years," said Munjal. "AI will fundamentally reshape education, and EdTech may become one of its biggest beneficiaries. The opportunity to reimagine learning products has never been greater."
upGrad, also founded in 2015, primarily focuses on higher education, upskilling and career transition programmes for college students and working professionals. It partners with universities globally to offer online degree programs, executive education, certifications, boot camps and job-linked courses in fields such as data science, management, technology and AI.
The acquisition will help upGrad in strengthening its integrated model from K12 to "forever learning", Screwvala said.
Published by HT Digital Content Services with permission from VC Circle.