Saturday, May 21st, 2022

Online Education Provider BYJU’S Will Raise $400-$600 Million Before IPO

According to reports, online education provider BYJU’S, India’s most valuable startup, is in talks to raise between $400 million to $600 million and then accelerate plans for an initial public offering next year. . One person, speaking on condition of anonymity, said the Bangalore-headquartered company could raise around $21 billion in pre-IPO funds in a few weeks. This fundraising is likely to be split roughly equally between equity and debt.

Byju’s, led by former teacher Byju Raveendran, aims to file its initial IPO document in the second quarter of next year, two people said. It previously saw a timeline of 12 to 24 months. People said the startup and its bankers are discussing a valuation of $40 billion to $50 billion, although the final determination will depend on financial results and investor demand.

Banks involved in the talks include Morgan Stanley, Citigroup Inc. and JPMorgan Chase & Co., one person said. The same banks are involved in the current fundraising. Byju’s, Morgan Stanley, JP Morgan and Citi declined to comment.

Investment bankers have also offered options such as an IPO in the US or merger with a special purpose acquisition company or SPAC, two people said, but those options are less likely than listing in India.

India’s technology sector has grown this year, with IPO fundraising on track to reach record levels. Venture capital firms have also increased their investments in the country, fueled by Communist Party actions in China, which have made that market less hospitable.

Byju’s was valued at $16.5 billion after raising about $150 million from UBS Group AG, Bloomberg News reported in April. It is ahead of the country’s second most valuable startup, digital payments provider Paytm, according to market research firm CB Insights. Meanwhile, Paytm has filed its preliminary documents for India’s biggest ever IPO worth $2.2 billion.

One person said Byju has the potential to become a global leader in education technology, especially because Beijing’s recent reforms have placed severe restrictions on similar startups in China. The person said this has attracted a high level of investor interest and suggested that a new target valuation of $21 billion could be achieved.

The online education startup, formally called Think & Learn, has major global investors including Facebook founder Mark Zuckerberg’s Chan-Zuckerberg initiative, Naspers, Tiger Global Management and private equity giant Silver Lake Management.

In a recent conversation with Bloomberg News, founder Mr. Raveendran said that the startup is targeting a revenue of 100 billion rupees ($1.4 billion) with a 20 percent margin in the year ending March 2022. Byju’s has been on acquisitions over the past year, acquiring startups that offer coding lessons, professional learning courses and test preparation classes for competitive Indian exams.

The company added 45 million students to its platform as the pandemic peaked in India last year and said it had over 100 million users on the app in July. It has some 6.5 million paid subscribers and has an annual renewal rate of 86 percent.