A Sigh Of Relief: BYJU’S Raises $250 Mn In Debt Funding From Davidson Kempner

In what will come as a big relief for BYJU’S, the edtech major has reportedly raised $250 Mn through structured investments from the US-based alternative investment firm Davidson Kempner.

The edtech decacorn is also close to bagging an additional $700 Mn from investors as it looks to move ahead with its plans for the public listing of its coaching chain subsidiary Aakash, TechCrunch reported citing sources. 

BYJU’S, which is reportedly looking to raise $1 Bn, is giving final touches to its deal to raise the remaining capital from a sovereign fund, which will likely arrive in the next two weeks in the form of a convertible note, the TechCrunch report added.

Structured instruments are securities-based investment products linked to markets that can later be converted into shares during events such as an initial public offering (IPO). 

Moneycontrol was the first to report the new development. BYJU’S refused to comment on Inc42’s queries on the latest developments.

Earlier this week, it was reported that the edtech firm was nearing a deal to secure as much as $1 Bn funding in a mix of equity and structured instruments at its current valuation of $22 Bn. 

BYJU’S was said to be in advanced talks to raise $700 Mn as part of an equity round that would be led by one of the three Middle East-based sovereign funds involved in deliberations. Alongside, it was also said to be eyeing $300 Mn via structured instruments from US-based asset management companies including the likes of Oaktree Capital Management and Apollo Management. 

While the entire deal was expected to close in a month’s time, the funds seem to have started flowing into BYJU’S coffers. 

The edtech firm is likely to deploy a part of the fresh proceeds to prepay some of the $1.2 Bn term loan B (TLB) it raised in 2021.

Silver Lining For BYJU’S

The mega fundraise comes amid a funding winter which has led to a funding crunch in the Indian startup ecosystem. It also comes as a respite for BYJU’s, which has been in the news for all the wrong reasons, including firing over 4,00 employees at its group companies in 2022, raids by the Enforcement Directorate (ED) at its three premises, allegations of mis-selling, criticism over its accounting practices and delay in filing financial statements.

The startup’s competitors have also waded into its territory as they look to spruce up offline offerings and scale cash-heavy offline operations.

Meanwhile, the fresh capital is expected to provide some breathing room to the company. A part of the new capital could go towards building up its warchest as it moves ahead with its plans to list subsidiary Aakash. The Bengaluru-based decacorn is said to be in advanced talks with Citi and Goldman Sachs to move ahead with Aakash’s IPO plans. It has also received board approval for the IPO plans and is reportedly preparing to file the paperwork in the matter.