India’s most-valuable startup, Byju’s, is raising $1.2 billion as a part of term loan B funding as the company prepares for a public listing in the coming months, confirmed two individuals aware of the discussion.
The decision has been approved by the board of Think & Learn Pvt. Ltd., the parent entity which owns the Byju’s brand, one of the above-cited individuals said. Both individuals spoke on condition of anonymity.
Mint had first reported on October 26, citing sources, that the edtech major was looking to raise a minimum of $500 million through Term Loan B (TLB) borrowings in the US.
Byju’s was expected to use the funds primarily to fuel its acquisitions, as well as deploy a portion of the raise towards working capital of the company. TLBs typically have a floating interest rate, with tenures of 5-7 years.
A Byju’s spokesperson declined to comment on the development.
The term loan comes at a time when the company is gearing up towards a public market debut over the next 12 months, and is actively deliberating both US and India for its potential listing.
Byju’s has been ramping up its acquisition strategy this year in a bid to enter newer edtech categories of upskilling, test prep and higher learning, while fortifying its presence across key international geographies including the US.
This year alone, Byju’s has made nine acquisitions, and has spent close to $2.5 billion in acquiring different edtech businesses. In April this year, it spent close to $950 million to acquire education institution Aakash Educational Services Ltd (AESL), in what is touted to be one of the most expensive acquisitions in the Indian edtech space. The edtech company also shelled out close to $600 million to acquire Great Learning, marking its entry into the upskilling space.
“The historic success of Byju's TLB, as the largest unrated TLB from India and Asia as well as one of the largest unrated TLB globally in history, reflects the strong credit story of the Company as one of the largest and fastest growth global edtech platforms with comprehensive suite of products for multiple age groups, many strong brands, differentiated immersive content to make children fall in love with learning,” said Kamal Yadav, managing director, Morgan Stanley.
American investment banks including Morgan Stanley and JP Morgan have worked with Byju’s to structure the TLB.
Bloomberg first reported on Byju’s upsizing its target size for the TLB on Monday afternoon. It also added that the company was in talks with Blackstone, Fidelity and GIC for the term loan.
Byju’s isn’t the first Indian startup to raise funds through a TLB route. Earlier in July this year, hospitality unicorn, Oyo Hotels and Homes Ltd. raised debt funding worth $660 million from global institutional investors, including Fidelity Investments. According to the Oyo, the proposed issuance was subscribed 1.7 times as it received commitments of close to $1 billion from leading institutional investors.
Byju’s currently has more than 100 million registered students and 6.5 million paid subscribers. It is in talks with investors to raise an additional $1.5 billion which could potentially value the edtech company at $21 billion, Mint reported in August. As a part of the round, Byju’s recently raised $300 million in October which valued the Indian edtech company at roughly $18 billion.
Think and Learn Pvt. Ltd, which runs Byju’s, reported a jump in total income to ₹2,380 crore in the year ended March 2020 from ₹1,305 crore in the previous year. However, losses widened to ₹262 crore from ₹8.82 crore in the previous year.