Mumbai: Byju’s is in negotiations with investors including TPG to raise more than $500 million, a much-needed capital infusion that could help the world’s most valuable edtech startup stave off potential debt issues.
Several investment firms including TPG and two Middle Eastern sovereign wealth funds have begun due diligence on the Indian company, which is hoping to keep its valuation steady at about $22 billion during the financing, people familiar with the matter said. That’s despite a global tech rout that’s prompted layoffs in the thousands, depressed global investment activity and shaved billions off the valuations of once high-flying tech startups.
Byju’s may issue convertible notes that would turn into equity around an initial public offering, one of the people said. Negotiations on the amount and structure are ongoing and it’s unclear if the prospective investors will go ahead with a deal, the people said, who asked not to be identified as the information is private.
Byju’s, which grappled with mounting losses after the pandemic-era boom in online tutoring petered out, is in separate talks with creditors to renegotiate an agreement governing a $1.2 billion loan that’s in breach of covenants.
Representatives for Byju’s and TPG declined to comment.
Byju’s stock-market debut
Founded in 2015 and formally known as Think & Learn Pvt., the Bangalore-headquartered startup shelved plans for a stock-market debut last year as global markets slumped. It last raised funds in October at a $22 billion valuation, days after announcing it would reduce its workforce by 5 per cent.
Backed by the Chan Zuckerberg Initiative, General Atlantic and Tiger Global, Byju’s raised billions of dollars in capital to finance a global acquisition spree in the face of a tech downturn worldwide. The company, which had at one point 150 million users, has since been plagued by challenges including a long-delayed filing of audited financial statements and a truncated fundraising last year.
The company in 2022 filed its audited financial results for the year ending March 2021 showing steep losses. And last year, it said it would shed 2,500 workers or about 5 per cent of its total workforce and lower its marketing and sales costs, pledging to become profitable by March.
Founder Byju Raveendran - a son of teachers and a former educator himself - is now working on that turnaround plan, pledging a recovery this year. He’s explored options including using his shares as collateral to raise funds and lift his stake in the company to as high as 40 per cent. It’s also finalizing plans for a $1 billion initial public offering of tutoring business Aakash Educational Services, and may consider IPOs of other units.