New Delhi: CL Educate Limited (CL), India’s leading education & knowledge services provider, has acquired ETEN, the test preparation business division of Pearson’s IndiaCan Education Private Ltd (“IndiaCan”). ETEN is a pioneer in tech-based satellite coaching for CA & IAS and has a strong brand with a wide VSAT network in India. Post-acquisition, the CL network expands to 192 centers with 5 high tech broadcast studios reaching ~93,000 students from an earlier network of 162 centres and ~83,000 students.
As was stressed during CL’s recent IPO, the deal has resulted in creation of one of the largest pan-India technology-based Test Prep networks offering a full bouquet of both aptitude-based (i.e. MBA, Law, SSC) and knowledge-based (i.e. CA & Civils) test prep courses under one roof. The technology-led asset-light business of ETEN is a perfect fit with CL’s focus on growth through low capex scalable and high ROCE businesses.
Synergies include multiple two way cross selling opportunities through increased physical infrastructure as well as the VSAT network. The acquisition will help increase profitability as CL courses can now be delivered via VSAT reducing delivery costs in existing ETEN Physical Centres in Tier 1 & 2 towns. Also, VSAT technology will help CL penetrate in Tier 3 & 4 towns where it is difficult to set up physical centres due to non availability of good quality faculty and low density of students. Further, the model is replicable in other segments like engineering, medical, etc. with low incremental cost.
The deal consideration involves a staggered payment of Rs 6 crore over 30 months and 4% revenue share for next 3 years.
The Indian test prep market, estimated at Rs.37,800 crore as of FY’16, is growing at a CAGR of 14% from FY 09. The industry is expected to grow in the next 5 years at an average rate of 13-14% per annum as per a Crisil Report with different segments growing at different rates.
The divestment is part of Pearson’s global strategy to exit non-core businesses in India. The company has identified CL as a suitable and credible partner to take the business forward.
Gautam Puri, Vice Chairman & MD of CL Educate, said, “”ETEN adds a large knowledge-based test-prep segment of CA & strengthens Civil Services for CL in test prep business. It also adds the tech-backbone and a network of centers that can be leveraged for growing all CL products.”