BYJU’s, the Indian edtech startup, which has been mired in several controversies lately, is said to close a deal to secure a humongous $1B from investors in the form of structured and equity investments.
The deal, if it happens, is touted to be one of the biggest funding rounds in the Indian startup ecosystem.
The purchase will take place at its current valuation of $22B and is anticipated to close within a month, Moneycontrol quoted sources as saying.
Mix of structured and equity investments
Out of the $1B, $700M would be raised through an equity round led by one of the three Middle East-based sovereign funds with whom the edtech behemoth is in advanced talks.
According to the report, the remaining $300M will be raised using 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.
Structured instruments are investment products based on securities that are connected to markets and that can be converted into shares at a later time via activities like an initial public offering (IPO).
According to the report, the investment round will assist the business in avoiding a potential debt issue. A portion of the $1.2 Bn term loan B (TLB) that the company raised in 2021 will be prepaid using the new funds.
The money raised will probably allow the company to carry out its expansion ambitions without worrying about cash flow, at least temporarily.
This comes at a time when the Indian startup ecosystem is experiencing a funding crunch, with major VC and PE firms drastically cutting back on new investments in Indian entrepreneurs.
BYJU’s is already embroiled in various controversies, including restructuring talks for the $1.2B term B loan and a huge restructuring operation that resulted in the layoff of 4,000 employees.
The company has also been accused of mis-selling its items to individuals who cannot afford them. Furthermore, their delay to file financial statements has been heavily criticised.
Byju Raveendran and Divya Gokulnath launched the company in 2011 with the goal of providing online video-based learning courses for K-12 students as well as competitive exams. In 2006, Byju, an engineer, began coaching children in mathematics.
BYJU’S has received $5.8B in capital to date from some of the world’s most prominent investors, including Sequoia Capital, Silver Lake, BlackRock, Prosus, General Atlantic, and Tiger Global, among others.
