ALLEN: Maheshwari brothers of Kota have built a coaching empire brick by brick

An industry that thrives on the performance of its students, Allen achieved 12 selections in the Rajasthan pre-medical test in 1991. That set the ball rolling. Currently, Allen has over 1.2 million alumni, it teaches around 200,000 students a year and has 46 centres across India.

And on Sunday, May 1, the James Murdoch and Uday Shankar-led platform Bodhi Tree Systems announced it was taking an undisclosed stake in Allen Career Institute in a $600 million deal that is expected to close within three months following regulatory approval. The test prep house was apparently valued at more than $1 billion.

Murdoch is the younger son of media mogul Rupert Murdoch, and Shankar is the former chairman of Star and Disney India.

From an institute that started with a table from home, Allen has come a long way, with 15 buildings that can accommodate 5,000 to 25,000 students each in Kota alone, and its infra (both owned and on rent) in Kota, reputed as the tuition capital of the country, is as good as office spaces in Gurgaon or Bengaluru— lavish, large and brimming with activity.

In fact, Allen and even some of its Kota coaching peers do not fit into the general perception of the physical test-prep sector in India, often characterised by chaos and informality.

Allen clocked revenue of around Rs 1,600 crore in 2019-20, as per informal sources, but it took a beating during the pandemic due to the closure of physical coaching centres for months. But with the situation improving and campuses reopening, things are gradually getting back to normal. “An unlisted family business will not speak about financial details…but with the investment coming in, it may change in future,” said a coaching industry source.

To give a further sense of its size, an Allen spokesperson told Moneycontrol that the test prep company has a staff strength of over 10,000 including over 3,000 teachers with the rest comprising administrative and support personnel. And, the spokesperson said, every year it hires a few hundred teachers and trains and keeps them on probation before elevating them to classroom teaching.

To be sure, Allen was earlier puritan in its outlook on coaching. During a visit by this correspondent in early 2012 to Kota and during interactions with the Maheshwari brothers, Allen was not very keen on two things—a franchise model or technology-led coaching, unlike some of its peers. Their dependence and faith on the physical mode of coaching were very strong then.

But things have changed significantly now, largely aided by three key factors—the gen-next of the Maheshwari family, the growth of edtech in India’s education space and the need to adopt technology to stay afloat, a point driven home during the pandemic.

And its transformation also was reflected in the funding announcement. “We believe that education is on the cusp of a technology-led renaissance that will fundamentally alter how education is imparted and will increase its efficacy… We are excited to work with the Maheshwari family to build an outcomes-focused digital education company that delivers on the aspirations of millions of learners and parents in India and beyond,” Murdoch and Shankar said on May 1.

Personal life

The Maheshwaris are soft-spoken but articulate education entrepreneurs. They know their own business and competitors well, but never hesitate to mention their humble background.

Even a post on Allen’s website reflects this behavioural trait. “Necessity is the mother of invention, but here it is the mother of a miracle. A miracle, which has grown manifold—ALLEN Career Institute,” reads the passage.

The brothers wear almost identical clothes quite regularly, speak in a similar tone and always underline that their unity has brought their venture this far.

“The unity has helped them grow for 34 years. The results in engineering and more so in medical entrances have increased their reputation. They are largely apolitical but the brothers have always been close to the government in Rajasthan,” said a rival test prep official, who asked not to be named.

Nitesh Sharma, a spokesperson of the test prep centre, said, “Allen functions like a family. There is no boss culture here. It’s a sir culture. That access, respect for staff and strong bonding with students have helped.”

And what about food and culture? The Maheshwaris love their vegetarian food, enjoy ‘bhajan sandhya and are devotees of “Hanuman ji of Chitrakoot Dhaam”.

Investment by Bodhi Tree

“Education is a critical consumer need, driven by its deeply transformative impact on lives and livelihoods of consumers,” the statement from Murdoch and Shankar after the investment announcement.

The investment in Allen comes at a time when the test prep market is in churn and traditional test-prep brands are reshaping themselves through investments, mergers and acquisitions. While Aakash Education was acquired last year by Byju’s for nearly $1 billion, another leading test prep brand, T.I. M.E., was acquired last month by listed edtech player Veranda Learning for Rs 287 crore.

The investment in Allen by Bodhi Tree comes amid a strong buzz that a leading edtech was looking to acquire a sizeable stake in Allen, but the deal could not come through due to valuation issues.

“Our partnership with Bodhi Tree is an essential ingredient in furthering our mission to significantly increase Allen’s reach and impact. We are quite pleased and excited that the Bodhi Tree team also sees value in combining their expertise with our experience in education,” said Rajesh Maheshwari, founder-director, Allen.