SoftBank, CPPIB Consider Secondary Investment In Eruditus

Eruditus In Talks To Raise $150 Mn At $2.3 Bn Valuation

SUMMARY

Eruditus is looking to raise $150 Mn, of which half is likely to be a secondary component

The secondary sale might happen at about $2.5 Bn or a 20% discount to Eruditus’ previous valuation of $3.2 Bn

CPPIB is already a lender to Eruditus, having issued a $350 Mn debt back in 2022

Upskilling and higher education unicorn Eruditus might receive up to $70 Mn in secondary funding from existing investor SoftBank and Canada Pension Plan Investment Board (CPPIB).

The edtech unicorn is looking to raise $150 Mn in a mix of primary and secondary capital, with half of the total consideration expected to be a secondary component, according to a Moneycontrol report citing sources close to the edtech. The secondary round is taking place due to some US-based investors seeking an exit due to LP commitments. It was also reported that a new, yet-unnamed sovereign wealth fund might join the edtech’s captable.

The secondary sale might happen at about $2.5 Bn, or a 20% discount, to Eruditus’ previous valuation of $3.2 Bn, the report added. Incidentally, the valuation is closer to what The Private Shares Fund had pegged when it reported a markdown of its investment in the company in May.

To be sure, Eruditus had signed a term sheet last year with CPPIB for $350 Mn in debt financing. However, the deal fell through, and the edtech raised $110 Mn in debt from HSBC and Marsh. The edtech unicorn has also considered raising funding through credit instruments or convertibles instead of equity. Still, per the report, the talks are at a very early stage and the structure of the deal could change going forward.

Founded in 2010 by Chaitanya Kalipatnapu and Ashwin Damera, Eruditus offers executive education programmes with global business schools such as MIT, Columbia, Harvard Business School, INSEAD, Tuck at Dartmouth, Wharton, UC Berkeley and London Business School.

These programs are held for six to eight months and can be available via on-campus, off-campus and online modes. It also offers courses from Indian institutions such as IIT Kozhikode, IIM Lucknow and BML Munjal University.

The edtech, which turned unicorn in August 2021 after raising a mammoth $650 Mn funding round, reported its consolidated net loss rising 46% year-on-year (YoY) to $386.8 Mn in the year ended June 30, 2022 (FY22) as its marketing expenses more than doubled during the year. Eruditus’ operating revenue jumped 1.8X to $245.2 Mn in FY22 from $131.2 Mn in the prior fiscal year.