Earlier today we learned about BYJU’s plans to take its tutoring business Aakash Educational Services public through an IPO, and now sources tell us the company has secured $200 million in capital. In addition to the news, we’re also hearing that the company has begun talks with lenders to raise more than $1 billion in acquisition financing.
Acquisition of another edtech company
Earlier this year, Byju Capital offered US-based edtech firm 2U for a complete acquisition in a cash deal. The deal valued the company at over $1 billion, making Byju the biggest takeover in the edtech space. The company’s shares closed at $9.30 on Nasdaq, an 80% decline since its shares soared to $55 in 2021.
Byju’s acquisition is the latest in a string of big deals for the Indian company. In March, Byju raised a $2.4 billion funding round to buy online education platform Chegg, and in February, it acquired educational games startup Osmo for $120 million. The company has since expanded its presence in the United States, acquiring TutorVista from Pearson and Edurite from the education company.
Byju’s has also spent more than $2 billion on acquisitions over the last two years, including a $1 billion deal for Indian test preparation provider Aakash Educational Services. Aakash has 200 centers in India and helped Byju’s establish its roots in the edtech industry. The company paid back $234 million to Blackstone, who had previously owned a 38% stake in Aakash.
Earlier this year, Byju’s was planning to go public via a special-purpose acquisition company (SPAC) route. However, a reversal in global markets forced Byju’s to suspend its plans. But it is still seeing strong interest from investors in the private market. Among Byju’s backers are Tencent, Tiger Global, Lightspeed Venture Partners, General Atlantic, Owl Ventures, and the Chan Zuckerberg Initiative.
Byju’s reported revenue of $305.6 million in March and a loss of $577.4 million in the current fiscal year. The company’s revenue is expected to double in the current year. The company has 3.5 million paid subscriptions and 50 million registered students.
Byju’s has also acquired several companies to shore up its offerings, including the education company Doubtnut and online tutoring platform Gradeup. It also plans to invest $1 billion in North America.
Byju’s has also raised a $1.5 billion funding round in the past two months, including a $200 million round from Tiger Global. Its valuation is expected to be around $22 billion, making it one of the most highly valued edtech companies in the world.
Plans for an IPO of its tutoring business Aakash Educational Services
Earlier this year, Byju’s, India’s largest online education provider, was considering an IPO of its tutoring business, Aakash Educational Services. But the global economy’s slowdown has put the plan on hold.
Byju’s acquired Aakash for more than $950 million last year. The company is considered to be one of the most expensive edtech acquisitions in India. It is one of the largest test prep companies in the country, with more than 215 centres and more than 250,000 students. The company’s operating margin is around 20%, and its annual revenue is expected to double in the current year.
Byju’s is now negotiating with four foreign banks for its IPO. It could pick a lead bank within two weeks, according to people familiar with the matter. The company also is in talks with several special purpose acquisition vehicles. It could file its Draft Red Herring Prospectus as early as February, according to people familiar with the matter.
The company is currently looking to raise between $800 million and $1 billion in an IPO. It might also opt for convertible instruments such as debt. Unlike many recent tech company IPOs in the country, Aakash’s financials are strong. The company is estimated to generate over $500 million in revenue in the fiscal year that ends in March 2024.
The company is also in talks with investors such as TPG and Texas Pacific Group. It recently raised $250 million in a private placement, and it has also received a loan from a subsidiary. Its loan has an interest rate of 7.5% annually.
Aakash has been a profitable company for years. But it must evolve in the edtech era. The company has been expanding its digital test prep offerings. It also has an interactive virtual classroom, Aakash Live. It also has more than 200 physical centres.
It has been ranked as the most valuable startup in India. A successful IPO could inspire Byju’s to do an IPO of other recent acquisitions. It could also encourage the company to continue its expansion into online test preparation services.
Byju’s had been in conversations with a number of special purpose acquisition vehicles before the company decided to go public. The company is expected to list in late August or September 2023.
In talks with lenders to raise more than $1 billion in acquisition financing
Among the more than a dozen global private equity funds vying for the top dog position, one stands out as the best bet for a hefty sum. According to a recent report, Baring Asia is in the midst of raising a whopping $600 million to fund its health care BPO unit. Despite this, the company has yet to disclose the name of its latest feisty.
As for the company’s recent moves, it has yet to formally announce its first quarter results. In the short term, it has done well to secure some of the largest loans in the industry. While the company did not provide a slew of details regarding its plans, it is said to be in talks with several major banks and financial institutions. Among those involved in the negotiations are JPMorgan Chase & Co., Citigroup, Goldman Sachs, and Morgan Stanley. Those firms have been wooing major clients such as the US Department of Defense, as well as private equity firms such as Blackstone, KKR, and Oaktree Capital. The company’s latest moves come as it seeks to further its global expansion objectives.
According to a recent report, a number of global private equity firms are in the midst of raising billions of dollars to fund their latest acquisitions. In the past, these firms have been relatively conservative, but are now in a more aggressive stance. Among the more high-profile deals, a number of the firms have made statements about the future of their businesses.
Aakash acquisition comes days after BYJU’s acquisition of US-based digital reading platform Epic
Earlier this year, India’s leading EdTech company, Byju’s, had acquired a US-based digital reading platform, Epic, in a $500 million deal. Now, it has reaffirmed its plans to expand into the US market with its acquisition of another education technology company, Aakash Educational Services. The deal is aimed at expanding Byju’s user base in the US.
According to reports, Byju’s has spent over $2 billion on acquisitions in the last six months. It has made four acquisitions this year, two of which are related to its international expansion plans. One is an education technology company called Epic, which provides a subscription service for digital libraries for students in grades 1-12. The other two are coding startup WhiteHat Jr and tutoring firm HashLearn. These acquisitions are expected to strengthen the company’s position in the skilled education segment.
Epic will also provide Byju’s with an existing distribution channel in the U.S., which it will use to further its personalized learning model for students. Epic has a large user base, with over 50 million kids worldwide. It has more than 40,000 popular books, videos, and audiobooks. There are over two million teachers signed up to use the platform in the classroom.
The company claims that its user base has doubled from last year. It has a global client base of over two million teachers and academics. Epic has a collection of over 250 publishers and 40,000 popular books.
According to Byju’s CEO, Byju Raveendran, the acquisition will help the company build a new kind of learning culture for kids in the U.S. It will also help them become lifelong learners. Byju’s is a global leader in personalized online learning. It claims to have a community of over 100 million students in its platform.
BYJU’S is backed by Sequoi Capital, Naspers, Silver Lake, and Chan-Zuckerberg Initiative. It has made a strong foothold in the US EdTech space and has aggressive plans for international market expansion.
In addition to its acquisition of Epic, Byju’s also announced plans to invest USD 1 billion in the North American market. It will also invest an additional $400 million in Great Learning, a Singapore-based educational games maker. The two companies will create a combined learning brand, which will allow them to engage with kids across the globe.
