upGrad Moves Closer To Unacademy Acquisition At 90% Valuation Cut

Edtech major upGrad is nearing the acquisition of Unacademy in an all-stock deal at a significantly lower valuation of around ₹2,055 Cr (about $218 Mn), sources told Inc42. This would be a 90% cut from Unacademy’s peak acquisition of $3.4 Bn it achieved during the 2021 funding boom.

The Ronnie Screwvala-led edtech platform is expected to seek the approval of the Competition Commission of India (CCI) for the acquisition this week.

The sources said that Unacademy is expected to have a cash of ₹900-₹950 Cr on its books at the time of closing the transaction. 

The development was first reported by ET. Questions sent to Unacademy and upGrad by Inc42 did not elicit a response till the time of publishing this story. 

This comes months after Unacademy cofounder Gaurav Munjal announced that upGrad signed a term sheet to acquire the startup. Three months before, the merger talks between the two fell through due to a valuation mismatch.

In his post, Munjal said the deal would be a share swap transaction, without disclosing the size at that time. He mentioned that he will continue as the CEO, noting that AI will play a key role in Unacademy’s next phase of growth.

Screwvala also confirmed the acquisition, stating that the deal includes Unacademy’s other verticals. “They disrupted the sector once, and now with AI they plan to do it again. We are already seeing Airlearn gain global traction,” he said then.

Unacademy’s Deep Valuation Reset

Earlier this year, Unacademy said it would buy back ESOPs worth ₹50 Cr. Prior to that, it decided to exit its offline business by converting company-operated centres into franchise partnerships, as part of its push towards a more capital-efficient model. Munjal added then that Unacademy had over $100 Mn in cash reserves.

Separately, upGrad is reportedly in talks to raise an internal round of about ₹375 Cr from existing backers, including Temasek. It is persistent to note that Temasek is a common investor in both the companies, holding about 22% stake in upGrad and 5% in Unacademy.

Unacademy has raised a total of $830 Mn in funding to date from investors like Blume Ventures, Peak XV Partners and Elevation Capital. upGrad, on the other hand, has raised about $330 Mn and was last valued at $1.9 Bn.

The deal is one of the biggest consolidation moves in India’s edtech sector, which is still adjusting to the slowdown after the Covid-led boom. Demand for online learning softened significantly post the pandemic, and the sector is still dealing with the fallout from the collapse of BYJU’S — once valued at $22 Bn.

Founded in 2010 by Munjal, Hemesh Singh, and Roman Saini as a YouTube channel, Unacademy evolved into a full-scale edtech platform in 2015. As the demand for online learning tapered off, Unacademy shifted focus from a purely online model to building a strong offline presence through physical centres.

However, it continued to be mired in losses. As a result, Unacademy began exploring a potential acquisition and held talks with multiple prospective buyers, including K-12 Techno Services, Allen Career Institute, and upGrad, in the past. These discussions did not materialise, mainly due to high valuation expectations. 

For upGrad, this marks its second acquisition this year. In February, it acquired Internshala, underscoring its aggressive inorganic growth strategy. The company has acquired more than half a dozen firms since 2022.

upGrad has also expressed interest in acquiring the stressed assets of BYJU’S, which is currently undergoing insolvency proceedings.

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