SUMMARY
The transaction will reportedly take place at BYJU’S current valuation of $22 Bn and is expected to close in a month’s time
.While $700 Mn would be raised via equity, the remaining $300 Mn would be secured through structured instruments
The funding round will help BYJU’S avert a potential debt crisis. The fresh funds will be used to prepay a part of the $1.2 Bn term loan B, which the company raised in 2021
Amid the ongoing funding winter and its multiple troubles, edtech decacorn BYJU’S is reportedly nearing a deal to raise a mammoth $1 Bn from investors, in a mix of equity and structured instruments.
If the deal goes through, it would be one of the biggest funding rounds in the Indian startup ecosystem.
The transaction will take place at its current valuation of $22 Bn and is expected to close in a month’s time, Moneycontrol reported citing sources.
Out of the $1 Bn, $700 Mn would be raised through an equity round, which will be led by one of the three Middle East-based sovereign funds that the edtech giant is in advanced talks with. The remaining $300 Mn will be raised via structured instruments, for which BYJU’S is in advanced talks with US-based asset management firms such as Oaktree Capital Management, Apollo Management, and Davidson Kempner Capital Management, the report said.
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).
The report said that the funding round will help the company avert a potential debt crisis. The fresh funds will be used to prepay a part of the $1.2 Bn term loan B (TLB) the company raised in 2021.
The fundraise will likely enable the company to continue with its expansion plans, without worrying about cash burn, at least for a while. Interestingly, the development comes amid a funding drought that has gripped the Indian startup ecosystem, which has seen big-ticket VC and PE firms slashing their new investments, by a big margin, in Indian startups.
The development also comes as a major sigh of relief for the edtech startup which has been mired in multiple controversies. From restructuring talks for the $1.2 Bn term B loan to a massive restructuring exercise that saw 4,000 BYJU’S employees losing their jobs, 2022 was a brutal year for the edtech platform.
Besides, the company has also come under the Enforcement Directorate’s (ED’s) scanner. Recently, the ED raided three premises linked to the edtech decacorn in connection with a Foreign Exchange Management Act (FEMA) probe.
The company has also been dogged by allegations of mis-selling its products to consumers who cannot afford products. Besides, its delay in filing financial statements has also come under heavy criticism.
However, the biggest issue seems to be mounting losses. BYJU’S net loss zoomed 1,880% to INR 4,588 Cr in the financial year 2020-21 (FY21) from INR 231.69 Cr in FY20. The company is yet to file its FY22 financials.
Till date, BYJU’S has raised $5.8 Bn in funding from some of the biggest names in the investor world such as Sequoia Capital, Silver Lake, BlackRock, Prosus, General Atlantic, Tiger Global, among others.
