Indian edtech landscape Allen Career Institute’s Strategic Acquisition of Doubtnut, the Kota-based Allen Career Institute, renowned for its coaching programs, is poised to make a significant stride by acquiring DoubtNut, a prominent doubt-clearing edtech company. This strategic move marks Allen’s inaugural foray into the Indian edtech sector, adding a new dimension to its already esteemed profile.
The Acquisition Deal: Structure and Implications
Three reliable sources, well-versed with the matter, have confirmed the acquisition’s details. Structured as a stock and cash deal, this move is characterized as a distress sale for DoubtNut, backed by Peak XV, struggling to secure substantial funding post its Series B round.
Allen Career Institute significantly bolstered its financial standing in May 2022 by securing an impressive $600million from Bodhi Tree Systems, a joint venture between James Murdoch, founder and CEO of Lupa Systems, and Uday Shankar, former president of The Walt Disney Company Asia Pacific.
Valuation Disparities and Consolidation Opportunities
Noteworthy is Lupa Systems’ previous investments in Indian edtech enterprises, including Doubtnut and Harappa Education. Doubtnut’s previous engagement in acquisition talks with edtech giant Byju’s faced valuation disparities, resulting in an unsuccessful deal.
The Allen-Doubtnut deal primarily comprises stock, with a minor cash component. Doubtnut’s struggle to establish a viable business model and challenges in monetization prompted the exploration of consolidation opportunities over the past few quarters.
Financial Insights and Investor Profile
DoubtNut, having raised approximately $50 million in total funding, reported spending Rs 194 crore during the fiscal year 2022 to earn Rs 10 crore. Internal documents reveal a revenue of Rs 26.6 crore in the last fiscal year (FY23). Noteworthy investors in DoubtNut include Peak XV Partners (formerly Sequoia), Omidyar, and Waterbridge.
On the other hand, Allen Career Institute, founded by Rajesh Maheshwari in 1988, strategically enhances its online presence through new websites and mobile apps under its digital arm, ALLEN Digital. In a move signaling its commitment to digital expansion, Allen appointed Abha Maheshwari, a former Meta executive, as the CEO of Allen Digital in May.
Robust Financial Performance and Future Prospects
In FY23, Allen Career Institute reported a robust financial performance, with revenue from operations reaching Rs 2,277 crore and a profit after tax of Rs 429 crore. This strategic acquisition aligns with Allen’s commitment to providing top-tier coaching programs for competitive exams such as IIT JEE, AIPMT, NEET-UG, KVPY, and the Olympiads.
Queries directed to key stakeholders, including Tanushree Nagori, Allen Career Institute, and Peak XV Partners, did not yield immediate comments, underscoring the sensitivity and significance of this landmark move.
FAQs – Addressing Key Queries
Q: Is this Allen Career Institute’s first acquisition in the Indian edtech sector? A: Yes, this marks Allen’s inaugural foray into the Indian edtech sector, positioning it strategically for further growth and influence.
Q: What prompted DoubtNut to consider consolidation opportunities? A: DoubtNut’s struggle to establish a viable business model and challenges in monetization led to the exploration of consolidation opportunities.
Q: How does this acquisition impact Allen Career Institute’s digital expansion? A: This acquisition aligns with Allen’s commitment to digital expansion, as evidenced by the appointment of Abha Maheshwari, a former Meta executive, as the CEO of Allen Digital.
This strategic acquisition by Allen Career Institute signifies a paradigm shift in the Indian edtech landscape, positioning the institute as a key player in the ever-evolving digital education sector. As the industry watches with anticipation, Allen’s foray into the acquisition arena sets the stage for transformative developments in the competitive coaching and edtech space.
