Buyouts soar in healthtech, edtech

EDTECH SAW BUYOUTS AND FUNDING ROUNDS RISE TO $954 MN IN 2020 FROM $520 MN IN 2019

NEWDELHI/BENGALURU: Edtech and e-health startups are on an acquisition spree as stronger companies attempt to fill gaps in portfolios or try to gain scale amid a surge in demand for remote learning and treatment options.

Year to date, there have been 13 buyouts and funding rounds worth $954 million in edtech startups, compared to nine buyouts and investments of $520 million in 2019, according to data sourced from researcher Tracxn Technologies Pvt. Ltd. Healthtech saw four acquisitions and funding rounds totaling $300 million, in the year to date period, according to Tracxn data.

Mergers and acquisitions are expected to continue in edtech and e-health startups as investors expect the covid-19 crisis will create a permanent change in how people access healthcare and education. Among edtech startups, Byju’s, Vedantu and Unacademy have been steadily buying out niche startups to diversify portfolios.

The investor community is convinced that the right alliances will help get them better valuations for their portfolio companies, said Amarjeet Singh, partner - tax, regulatory and internet business, KPMG in India.

“We will definitely see a bigger appetite for acquisition in this sector because of the sheer size of the addressable market. The only issue would be to find quality targets that are unique with sustainable revenue streams,” Singh said. In e-health, most recently, Reliance Industries Ltd acquired a 60% stake in online pharmacy Netmeds for ₹620 crore. Online medicine and healthcare products retailer Pharmeasy has proposed a merger with rival Medlife. If the merger goes through, Medlife is expected to get a 19.59% stake in Pharmeasy. The combined entity is likely to be valued at $1.15 billion.

This year, Byju’s acquired code training app Whitehat Jr for $300 million, marking its fifth acquisition. It had last acquired Osmo, a maker of educational games, for $120 million in January 2019. Similarly, Unacademy bought Prepladder, a postgraduate medical entrance exam preparation platform for $50 million in July, as it looks to strengthen its presence in medical entrance examination categories.