Dev Clever to acquire Veative’s subsidiary for £54.75m
(DEV ) has entered into an agreement with Veative to acquire the Company’s wholly owned Indian subsidiary Veative Labs Private ("VLPL") for around £54.75 million.
Under the deal, Dev will acquire the immersive education materials (including STEM content) that will be utilised during the near-term roll-out of its existing partnership agreement with VLPL and the National Independent Schools Alliance ("NISA" and "NISA IP").
The Company had previously entered its existing partnership with NISA, which is India's largest governing body for budget private educational institutions, back in December 2020.
The consideration for the acquisition of VLPL is to be settled through the issuance of 150 million new ordinary shares in the Company. Based on the Dev Clever mid-market closing price of 36.5p on Friday 9 April 2021 the equity consideration amounts to around £54.75m.
In terms of future revenues and profits, Dev said it will retain 100% of all future revenues and profits generated from the partnership with NISA and those generated through VLPL.
The new agreement will include an exclusive initial one-year IP licensing agreement for additional immersive educational materials that are ‘bespoke to the Indian market’ (Indian IP).
The agreement will also include a call option for a period of one year over the Indian IP as well as Veative's global distributor agreements, subject to third party consents, Dev noted.
Upon completion of the VLPL acquisition, CEO of VLPL Ankur Aggarwal, who as part of the agreement will receive an additional 30 million ordinary shares as an earnout consideration subject to achieving key milestones, will join Dev Clever's board and executive team.
Dev believes the acquisition will enable it to accelerate content and platform development, which will allow it to ‘leverage VLPL's uniquely skilled workforce of over 100 staff members.’
It said the deal will grant it the opportunity to unlock new and exciting revenue streams in the global enterprise sector by providing immersive learning and development solutions.
The dedicated resources and infrastructure in India is expected to ‘maximise the opportunity with NISA affiliated schools and the wider BPS (budget private schools) sector.’
Dev said the agreement will ‘significantly strengthen’ its end-to-end capabilities as well as accelerates and enables the enlarged organisation to “efficiently integrate and aggregate 3rd party online learning content through further partnerships and acquisitions,” it noted.
"Today's announcement is the natural culmination of the tireless work and tangible progress the teams of Veative and Dev Clever have made in recent times,” said CEO, Chris Jeffries.
He added, “It's transformational for us both and the second acquisition for Dev Clever as a listed company. Veative is well established and highly regarded in India, has complementary skills in LMS and CDN and furthers our geographical reach.
The EdTech market is expanding rapidly and as a combined entity with considerable strength in content, technology, people, infrastructure, geographical reach and capital flexibility, we collectively will be focused on turning our combined organisation into a leading global player."
Ankur Aggarwal, CEO Veative Labs, said, "We are excited to be joining forces with Dev Clever at a critical time of development for both companies. This is a moment in time in which our combined skills greatly surpass the sum of our parts as a burgeoning EdTech marketplace in India and beyond is absolutely in need of the solution we can uniquely bring to bear.
“To contribute to global educational needs in a concrete, sustainable and profitable way is both humbling and compelling, and we anticipate that smart investments in capital and energy will pave the way for a bright future as a global player in a dynamic and thriving marketplace."
Today’s news is described by CEO, Chris Jeffries as a “transformational” deal for DEV. Amongst other things, the dedicated resources and infrastructure in India will ‘maximise the opportunity with NISA affiliated schools and the wider BPS (budget private schools) sector.
Shares in Dev Clever have more than doubled in value since the beginning of 2021. The stock was trading 4.17% higher this morning at 37.5p following the announcement.
Reasons to DEV
Dev Clever Holdings is a software and technology group based in Tamworth, United Kingdom, specialising in the use of cloud-based VR and gamification technologies to deliver rich customer engagement experiences across both the education and commercial sectors.
Its educational division offers careers guidance and recruitment solutions to secondary schools, colleges, universities, apprenticeship providers and employers with digital products to recruit and develop applicants and skills within their institutions and organisations.
Through its VR Careers Experience, VICTAR, the group encourages ‘hard to reach students disengaged from the process as well as reaffirming students on their career journey.’
Focused on bridging this global skills gap, DEV offers technology designed to support schools globally and to embrace immersive technology and revolutionise career guidance programs.
Due to a new reality of distance learning in the age of the COVID-19 pandemic, the EdTech space has surged with analysts previously reporting an average increase in revenue of 335% according to an industry impact analysis by Rootstrap.
According to market data published by MarketsandMarkets, the EdTech and Smart Classroom Market size is expected to grow globally from $85.8 billion in 2020 to $181.3 billion by 2025.
In May this year DEV entered into an agreement with Intrinsic Capital Jersey Ltd, founded by serial entrepreneur and investor Chris Akers, to raise up to £10m (gross) through a subscription at 10p.
The fund raised in May enabled DEV to accelerate its growth plans with collaboration partners and clients whilst also funding the expansion of the Company into new territories.
The valuation multiples for EdTech Companies continues to rise as larger multinational companies acquire innovative players in the space to capture growth.
In recent weeks, the Company announced that it had entered into a five-year exclusive partnership agreement with Veative Labs (“Veative”) and the National Independent Schools Alliance (“NISA”), India’s largest governing body for budget private educational institutions.
The agreement saw all parties execute an implementation and rollout schedule from last month, which will result in Dev’s Launchyourcareer being utilised by NISA as the platform-of-choice to deliver a minimum standard of career guidance across its schools.
NISA represents over 70,000 budget private schools in India, attended by c.13 million students. Chris Jeffries, Chief Executive of Dev Clever, has described the agreement as “a significant opportunity to support the development of millions of young people in India.”
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