The Smartclass Educational deal is strategic because it has a strong sales and distribution team of over 500 people, something that will be valuable for EBIX as it moves forward in its acquisition of Educomp. Educomp, it may be recalled, filed for insolvency in May 2017, had practically stopped doing new business for the past two years and had no sales and distribution channel.
Ebix will go head to head with companies such as Byju. Byju is tapping the online education market in India, focused on the large size of the market with over 250 million consumers.
Evidently, investors love this space and as per data visible in the public domain, have reportedly poured over $240 million into the still loss-making Byju, taking Byju's valuation to over $1 billion in its latest funding round.
Will Ebix be able to compete with Byju with investors such as Sequoia, the Chan Zukerberg Foundation and China's Tencent?
"It will all depend upon the quality of the educational solution and footprint into schools. The fact is that while Educomp faced debt-related issues, it does have huge goodwill and acquired an early start in the digital classroom market, something an investor with deep pockets can turn around," said a person involved with the negotiations on condition of anonymity.
With Smartclass Educational, Ebix gets a ready-made sales and marketing team that can be used to push other Ebix products into India from its US headquarters.
Robin Raina, CEO of Ebix, recently announced that he expects India to contribute an ambitious $500 million to Ebix global revenues over the next three years. Acquisitions like Smartclass Educational are one such step forward in fulfilling this goal.
The Indian government in the latest budget proposals has announced a $5 billion outlay for equipping every classroom in government schools with SmartBoards. Ebix is certainly taking an early lead.