ETtechEdtech startup PhysicsWallah will invest Rs 500 crore in Kerala-based hybrid learning platform Xylem Learning over the next three years to acquire a 50% stake.
The deal involves the purchase of fresh shares and a part of the stake held by Xylem’s existing investors in cash and stock. A portion of the investment will be towards enhancing the learning models of Xylem.
The investment is part of PhysicsWallah’s goal to consolidate its presence in South India, the Noida-based company said. Xylem, which offers test prep courses for exams such as NEET and JEE, is currently present in Kerala and will now expand to Tamil Nadu, Andhra Pradesh and other southern markets.
"In three years, we will invest Rs 500 crore to propagate the … Xylem model of hybrid learning to other adjoining sister states … To do this, it will require robust team building, content development, technological innovation, expansion in other categories and hybrid centres,” Alakh Pandey, founder and CEO of PhysicsWallah, said in a statement. “We will also look at M&As (mergers and acquisitions) in the South.”
For PhysicsWallah, Xylem founder and CEO Ananthu S will drive the South India business. Ananthu said Xylem plans to double its revenue in FY24 to Rs 300 crore, from Rs 150 crore in FY23.
As of now, Xylem, which has 1,400 employees, provides free classes to over 3 million students through its 30 YouTube channels. Additionally, it has more than 100,000 paid students for various online courses and 30,000 students in its offline/hybrid centres located across Kerala. The platform also operates 10 tuition centres and a school-integrated programme in seven schools.
While Xylem will continue to operate as an independent brand, the investment follows PhysicsWallah’s strategy of expanding into the vernacular learning segment for test-prep courses. Through its YouTube offerings, the profit-making company has ventured into West Bengal, Gujarat, Karnataka, Andhra Pradesh and Telangana.
Earlier this year, ET reported that PhysicsWallah was planning to double the allocation for mergers and acquisitions to $100 million with an aim to acquire startups operating in various test-prep segments, in addition to augmenting its geographical presence.
Founded by Pandey and Prateek Maheshwari, PhysicsWallah gained the unicorn status last year, when it raised $100 million in its maiden round of funding from WestBridge Capital and GSV Ventures with a valuation of more than $1.1 billion. For the financial year through March 2022, it reported standalone operating revenue of Rs 232.48 crore, a nine-fold increase from the previous year. Net profit for FY22 increased to Rs 97.8 crore from Rs 6.93 crore.
The deal involves the purchase of fresh shares and a part of the stake held by Xylem’s existing investors in cash and stock. A portion of the investment will be towards enhancing the learning models of Xylem.
This is the latest in a series of acquisitions made by GSV Ventures and WestBridge Capital-backed PhysicsWallah over the last one year, when it bought UAE-based K-12 online and offline learning startup Knowledge Planet that offers test-prep products targeted at NRIs in the Gulf region. It has also acquired companies including iNeuron, Altis Vortex, PrepOnline and FreeCo.
The investment is part of PhysicsWallah’s goal to consolidate its presence in South India, the Noida-based company said. Xylem, which offers test prep courses for exams such as NEET and JEE, is currently present in Kerala and will now expand to Tamil Nadu, Andhra Pradesh and other southern markets.
"In three years, we will invest Rs 500 crore to propagate the … Xylem model of hybrid learning to other adjoining sister states … To do this, it will require robust team building, content development, technological innovation, expansion in other categories and hybrid centres,” Alakh Pandey, founder and CEO of PhysicsWallah, said in a statement. “We will also look at M&As (mergers and acquisitions) in the South.”
For PhysicsWallah, Xylem founder and CEO Ananthu S will drive the South India business. Ananthu said Xylem plans to double its revenue in FY24 to Rs 300 crore, from Rs 150 crore in FY23.
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As of now, Xylem, which has 1,400 employees, provides free classes to over 3 million students through its 30 YouTube channels. Additionally, it has more than 100,000 paid students for various online courses and 30,000 students in its offline/hybrid centres located across Kerala. The platform also operates 10 tuition centres and a school-integrated programme in seven schools.
While Xylem will continue to operate as an independent brand, the investment follows PhysicsWallah’s strategy of expanding into the vernacular learning segment for test-prep courses. Through its YouTube offerings, the profit-making company has ventured into West Bengal, Gujarat, Karnataka, Andhra Pradesh and Telangana.
Earlier this year, ET reported that PhysicsWallah was planning to double the allocation for mergers and acquisitions to $100 million with an aim to acquire startups operating in various test-prep segments, in addition to augmenting its geographical presence.
Founded by Pandey and Prateek Maheshwari, PhysicsWallah gained the unicorn status last year, when it raised $100 million in its maiden round of funding from WestBridge Capital and GSV Ventures with a valuation of more than $1.1 billion. For the financial year through March 2022, it reported standalone operating revenue of Rs 232.48 crore, a nine-fold increase from the previous year. Net profit for FY22 increased to Rs 97.8 crore from Rs 6.93 crore.
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