Study-abroad player Leap is in late-stage talks to acquire Prodigy Finance

Flush with funds, study-abroad platform Leap is in late-stage talks to acquire study-abroad fintech Prodigy Finance Ltd, with plans to acquire more startups, three persons close to the development told Mint.

The final details are being ironed out, and the deal will close soon, said one of the persons, adding that Leap is also evaluating two to three other startups to acquire.

Mint could not ascertain the size of the deal. 

Queries sent to Leap and Prodigy on Thursday haven't elicited a response.

Also Read: As Byju's-burnt private investors turn cagey, edtech startups take IPO route to grow

On Wednesday, its student-lending arm, Leap Finance Inc., secured a $100 million debt facility from HSBC's $1 billion ASEAN Growth Fund for new economy businesses to support students pursuing international education, the company said in a statement.

Since its inception in 2019, Leap has raised over $400 million in equity and debt.

Leap's merger and acquisition (M&A) aspirations also follow January's $65 million Series E equity round led by Apis Partners. “One of the terms of the funding from Apis included the acquisition of Prodigy as they majorly support finance-focused ventures," said the second person from the three quoted above.

Apis Partners also did not respond to Mint queries till the time of publishing the story. 

Founded in 2007, Prodigy Finance is a higher education finance company with a borderless lending model that allows students to apply for loans based on their future earning potential rather than their current circumstances or credit history. The company also secured financing of up to $310 million with a funding commitment from the US International Development Finance Corporation (DFC).

Also Read: Blackstone bought this edtech at the peak of a funding frenzy. Now, it's looking at an exit.

In an interview following the equity funding in January, founder Arnav Kumar told Mint that the company is looking for M&As to expand, especially in China and India. If the deal goes through, it will be a large acquisition for Leap Finance, which has already acquired Yocket.

Leap, which runs Leap Scholar, Leap Finance, GeeBee and Yocket, caters to Indian students pursuing or wishing to pursue higher education abroad. The platform offers test prep for international exams such as IELTS, TOEFL and SAT, admissions and visa counselling, and international student loans. 

While the company did not disclose the recent funding round valuation, it was valued at $850-900 million in the funding round before that.

Also Read: Indian edtech ecosystem to see further integration of traditional models: GSV Ventures

Leap's funding spree comes after over two tough years for edtech, marked by waning investor confidence due to declining post-pandemic demand for online learning, a shift from growth to profitability, and the collapse of industry leader Byju’s. 

But over the past year, edtechs have started niching down especially in high-margin or under-penetrated areas like study abroad, resulting in the segment gaining investor confidence.

Note: An earlier version of this article had said that study-abroad consultancy KC Overseas Education was among entities that Leap was evaluating for an acquisition. KC Overseas Education asserted that it was not engaged in M&A discussions with any entity, including Leap.