Private equity education sector deals plummet in Asia-Pacific

Private equity and venture capital investment in education services in Asia-Pacific fell significantly in 2025 compared with the previous year.

The value of deals in the sector decreased 87% year over year to $240 million in 2025, and the number of transactions dropped to 35 from 57, according to S&P Global Market Intelligence data.

The steep declines were due to more rigorous deal selection and potential AI impact on the sector, industry observers said.

Capital flowing into education technology (edtech) firms is moderating, particularly venture capital investment, said Aldric How, executive director for deal advisory at BDO Singapore.

"Edtech benefited from accelerated adoption and strong capital inflows during the pandemic. What we are now seeing is a recalibration to focus on proven business models around profitability, customer retention and unit economics," How said.

A second factor is potential AI disruption in the sector, many of which are software-based companies. "Investors are also asking whether a business is AI-enabled or potentially AI-disrupted, How added.

The investment decline also showed up in median deal value, which fell 20.7% year over year to $2.3 million.

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Japan leads

Across markets, Japan led with $177.6 million in deal value, followed by India with $33.2 million, both across nine transactions.

The region's largest education services transaction involving private equity and venture capital in 2025 was in Japan: Nippon Sangyo Suishin Kiko Ltd.'s $160.5 million acquisition of With us Corp.

The third largest transaction was also in Japan, where SHE Inc. raised $11.6 million in a series C round that included participation from Marui Group Co. Ltd., Moon Creative Lab Inc., MPower Partners GP Ltd., MPower Partners Fund LP and SIG Asia Investments LLLP.

Japan's robust education market is a reflection of the importance Japanese families put on their children's education, according to Sudeep Laad, partner at consulting firm L.E.K. Consulting LLC.

Meanwhile, India accounted for four of the top 10 largest education services deals in 2025.

Regulation change

Investments in education services in India are expected to increase once clear guidelines for the sector are established.

"For-profit education is not allowed [in India]. ... It creates certain challenges and doubts in investors' minds, mostly around exit," L.E.K.'s Laad said.

Some structures allow private participation in India's education sector, such as forming a management company that provides services to the nonprofit firms. However, guidelines on the types of education companies that can be exited through IPO would make the sector more attractive, according to Laad.

Only tutoring and edtech remain unregulated in India, and these are the only segments that have had public listings. Laad cited Physicswallah Ltd., an India-based edtech company that completed its IPO in 2025, as an example.

Sector in need of consolidation

Education services investment is expected to increase in Asia-Pacific because the sector remains fragmented compared with Western markets.

L.E.K.'s Laad said private equity investors will likely be attracted to platform building, or growing one company through add-on acquisitions to scale the business.

Higher education, which includes colleges and universities, is following the path of K-12 education services when it comes to platform building.

"[It's better] for scalability, which translates into margins. So higher education businesses run at 35% to 40% profit margins, and that makes it attractive," Laad said.