Will raise more capital if an interesting acquisition comes up: Physics Wallah

Physics Wallah's founder Prateek Maheshwari.
Physics Wallah's founder Prateek Maheshwari.

Summary

  • Westbridge-backed edtech unicorn Physics Wallah is evaluating inorganic deals, cofounder Prateek Maheshwari says

Mumbai: The drubbing that the edtech sector has received coupled with the funding winter has thrown open a fire sale of assets. A development that has got Westbridge-backed edtech unicorn Physics Wallah evaluating more potential acquisitions.

The firm that turned profitable in FY21 has set aside a war chest of around $100 million for its inorganic plans, Physics Wallah cofounder Prateek Maheshwari said in an interview on the sidelines of the India Digital Summit in Mumbai. 

The company has acquired six assets in the recent past and is on the lookout for more good assets, Maheshwari said.

According to him, a lot of startups that took the cash-burning route are finding it difficult to raise more capital now with the macros and valuations changing along with cash flow and capital being less available. "So, we are being opportunists and evaluating a couple of good deals," Maheshwari said.

Asked about the capital set aside for these growth plans, Maheshwari said that the company has $60 million from the fund raise. “Fundamentally, we are a cash generating company and can put that incremental capital to use. I am also open to raising more capital if an interesting acquisition opportunity comes up."

Though the company has grown 150% in terms of overall revenue and is likely to close FY24 with 2,000 crore revenue, it is still in search of newer growth areas.

“Online will continue to drive our business as currently around 55% of the business still comes from selling online courses. We are also betting big on the physical centres and phygital is the way forward," Maheshwari said. According to him, the company has opened 150 centres across 105 cities in the last 18 months. “We are opening one centre every five days. We are aggressively prioritising growth and cornering more market share," he added.

In June 2022, Physics Wallah raised $100 million from Westbridge Capital and GSV Ventures. While the funds hold 9% stake in the company, the founders together hold around 91% stake in the company that was last valued at $1.1 billion.

Till now, the company has acquired six firms as part of its efforts to bulk up the topline. The company is bullish about opening residential schools. “There is a huge gap that we have seen in our school education system and our model of residential schools aims to address it," Maheshwari said adding that the firm is also looking to tap into upskilling and the college education space to make India's youth job ready.

“We have successfully started some of the new business lines for us, which will give us growth in FY28 or FY29," he said.

Maheshwari cofounded the company with Alakh Pandey in 2016. The company that was bootstrapped for the first eight years is preparing internally for a public listing over the next 24-36 months. “I feel IPO is a one time, irreversible, event in the life of a company and we are extra cautious about it. We have started preparing ourselves for it with a target of 24-36 months away," he said.

The company that has more than 15,000 employees undertook a cost rationalisation exercise last year where they asked around 120-150 employees to leave. Calling it a performance linked decision, Maheshwari said the company continues to be a net hirer.

“We are on a hiring spree, not the other way around," he said.

Asked about the learnings as a founder from the Byju’s episode, Maheswari said that notwithstanding the problems and slugfest with the investors, Byju Raveendran should be credited with creating the edtech category in India. “People make mistakes. But we have to give credit where it is due and this man has single handedly created edtech as a category in the country and has been at it for so many years," he said.

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