InvestorQ : How do you see Byju’s recent plans to raise around $500 million of fresh funds for global acquisitions?
Crowny Pinto made post

How do you see Byju’s recent plans to raise around $500 million of fresh funds for global acquisitions?

4 weeks ago

In the latest piece of news coming in, India’s largest edtech player Byju’s is planning an aggressive fund raising to the tune of $500 million. This Rs4,000 crore fund raising plan is intended to bank roll its global acquisitions plan. Incidentally, what is surprising is that Byju's, is expected to raise the sum of more than $500 million at an indicative valuation of around $23 billion. While there is no final announcement, if it does happen, it would be an extremely aggressive valuation considering the current state of affairs of Edtechs in India.

Apparently, the news on the street is that Byju’s along with its investment bankers are already in fairly advanced stage of talks with two major middle-east based sovereign funds. While the actual names are known, reports indicate that these 2 sovereign funds could be Abu Dhabi Sovereign Wealth Fund and Qatar Investment Authority. Byju’s is talking to the sovereign funds since most of the traditional private equity funds or the PE funds have been going relatively slow on infusing fresh rounds of funding into Indian Edtechs.

The surprising part is that Byju’s is planning to use these funds for some big ticket buys in the US. Byju’s has taken up much larger inorganic expansion steps to make the best of the crisis in funding edtech and it believe that as the industry leader it should gain from the consolidation in the edtech sector. Byju’s has already successfully acquired the US-based reading platform Epic for $500 million and the US based coding site Tynker for $200 million. That is just one part of its recent global appetite for acquisitions and more are done already.

Byju’s also plans to buy out Chegg and has already bought Singapore-based Great Learning for $200 million and Austria's GeoGebra, a mathematics operator, for $100 million. It is also talking to US-based 2U, which offers online courses created by marquee top league names like Harvard University, Massachusetts Institute of Technology (MIT) etc. However, the latest fund raising pegs the value at $23 billion while Byju’s is yet to get the money from Sumeru Ventures for its last round of funding at a $22 billion valuation. That is the riddle.

Not all is bad for Edtechs and Byju’s is gaining from its online plus offline delivery model for classroom content. Growth has been fuelled by recent buys of Aakash and Great Learning, with Great Learning achieving 200% growth traction. Byju’s is a formidable name with presence in 120 countries and over 7.5 million paid users. However, the first priority must be to avoid embarrassments like the recent order from MCA regarding its FY21 results. That is the bad publicity engine that Byju’s must first and foremost be able to manage.