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3 min read . Updated: 03 Aug 2021, 06:01 PM IST Investors nursing their wounds from the brutal selloff in Chinese education stocks should consider a journey to the west. In India—home to the world’s largest primary- and secondary-school student population—the online-education business is booming.
Chinese education stocks have lost billions of dollars in market value in the past couple of weeks as Beijing announced regulations that could wipe out much of the after-school tutoring sector.
But money is rushing into another populous Asian giant. Indian online-learning platform Unacademy raised $440 million at a $3.44 billion valuation from investors including the SoftBank Vision Fund and Singapore’s state investment fund, Temasek, the company said Monday. Unacademy’s valuation has jumped more than 10 times in the past 18 months, according to the company.
And its rival Byju’s, backed by China’s Tencent and Sequoia, is India’s most valuable unicorn at a valuation of $16.5 billion, according to market research firm CB Insights. General Atlantic and Tiger Global are investors in both companies. Byju’s could be looking for an initial public offering within the next 18 months, according to local media.
Venture-capital investment into Indian education-technology companies last year amounted to nearly $1.5 billion, six times the level in 2019, according to Bain & Co. Both the number of deals and average deal size has picked up.
The country’s growing student population and focus on examinations are big draws. India has the world’s largest number of K-12 school students, at 260 million. Bernstein forecasts that will increase to 300 million by 2030. The bank expects the online K-12 education market in India to grow to $4.8 billion in 2025, from $700 million last year. And that would still only make up a small portion of the $120 billion K-12 education market projected for 2025.
Covid-19 has been a big tailwind. Byju’s said it added 45 million new free users on its platform in the April-to-September period last year. And the companies have also been on a spending spree to expand and diversify their offerings. Byju’s acquired Aakash Educational Services, a 33-year old test-preparation provider, and Epic, a U.S.-based online reading platform, this year.
Most of these companies are still private for now, but an IPO boom for Indian internet firms more broadly may help them go public before too long. The share price of online delivery company Zomato has nearly doubled since its IPO last week. Fintech giant PayTM, backed by China’s Ant Group, has filed to list and will likely attract a lot of interest as well. Ant, which failed to go public last year due to regulators’ intervention, may reap a windfall from this IPO instead.
The Chinese education sector burned investors partly because they didn’t do their homework, and India has a mixed record on its treatment of foreign investors as well. But there is little doubt the fundamental demand for tutoring is there—and for the time being at least, the regulatory and market environment looks far more favorable.
This story has been published from a wire agency feed without modifications to the text
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