Edtech Giant Byju's Raises $250M to Fuel Expansion Ahead of Anticipated IPO
Byju's Receives $250M from Davidson Kempner, Additional $700M from Sovereign Fund on the way
13 May 2023
Byju's raised $250m from Davidson Kempner through structured instruments.
Byju's is expected to receive an additional $700m from a sovereign fund within two weeks.
The funding will bolster Byju’s war chest ahead of the anticipated IPO of Aakash.
Indian edtech giant, Byju’s has raised $250m from Davidson Kempner through structured instruments, according to anonymous sources. The company is also expected to receive an additional $700m from a sovereign fund within two weeks, which will come as part of a convertible note that caps the valuation at $22bn. The capital will bolster Byju’s war chest ahead of the anticipated initial public offering (IPO) of Aakash, which Byju’s acquired for nearly $1bn in 2019. The company is in advanced talks with bankers including Citigroup and Goldman Sachs about the IPO.
Byju’s, which has maintained its $22bn valuation for the past year, has benefited from the boom in online education driven by the pandemic and spent more than $2.5bn in the past two-and-a-half years to acquire startups globally as it expanded and broadened its offerings.
This funding round provides a vindication for Byju’s founder and CEO Byju Raveendran after the Enforcement Directorate, India’s financial probe agency, conducted searches at the firm’s offices under the provisions of the Foreign Exchange Management Act. The financing comes at a difficult time for India’s start-up ecosystem, with investors cutting bets by more than 80% and exercising caution around edtech firms, which have seen demand fall for online learning post-pandemic.
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The fresh funding will also enable Byju’s to prepay a part of the $1.2bn term loan B (TLB) it raised in 2021. The company had offered to increase the rate of interest on its TLB by 200 basis points as part of renegotiating its debt-financing arrangements. The company has been renegotiating terms with its lenders after some sought prepayment of $200m over restructuring the loan.
Byju’s has also faced accounting irregularities, alleged mis-selling of courses, and mass layoffs. The company has laid off more than 3,500 employees in the past year as it has suffered from drying venture capital funding and slowing demand for online learning services.
Despite the harsh backdrop, Byju’s has been growing and counts Prosus Ventures, Chan Zuckerberg Initiative, Sequoia Capital India, Silver Lake, Owl Ventures, UBS, and Blackrock among its backers. The firm has amassed 150 million users who use its learning app while hundreds of thousands of students visit the firm’s brick-and-mortar centers. Byju’s recently generated gross revenue of $1.258bn in the financial year that ended in March last year, with revenue of $570m recorded between April and July 2022.