Byju’s has borrowed $ 1.2 bn., more than double its prior target. One of India’s most valuable startups prepares a war chest for future acquisitions and working capital ahead of a potential public debut next year. The board of Think and Learn Pvt. Ltd, the parent entity of Byju’s, approved the borrowing plan via a Term Loan B (TLB).  

Livemint initially reported on 26 October 2021, that the Bengaluru-based edtech startup had planned to raise $ 500 mn. through a TLB in the United States. TLBs typically feature a floating interest rate and a 5-7 yrs maturity period. Institutional investors, such as hedge funds provide loans with characteristics comparable to high-yield bonds. 

The fact that a major portion of the principal and accrued interest will be paid on maturity makes these loans attractive to the new, fast-growing businesses. Byju’s will largely use the capital to expand its acquisition strategy. It would also use some of the funds to meet its working capital needs. According to Bloomberg’s report, Byju’s is in talks with Fidelity, Blackstone, and GIC for the term loan. 

Byju’s fundraising strategy comes at a time when the firm is debating whether to go public in both the United States and India next year. Meanwhile, the company has been stepping up its acquisition strategy this year in order to expand into new edtech categories of coaching, test prep, and higher education. This also includes strengthening its footprint in key geographies such as the United States.

The company has made 9 acquisitions this year alone. They have spent close to $ 2.5 bn. on various edtech startups. In April, they paid over $ 950 mn. for Aakash Educational Services Ltd., reportedly one of the most expensive purchases in the Indian EdTech sector. Byju’s also paid about $ 600 mn. for Great Learning, one of India’s largest professional learning companies, signalling their foray into the upskilling market. The company bolstered their US incursion earlier this year by acquiring Epic, a kids reading platform, and Tynker, a code-learning site. 

Byju’s isn’t the first Indian business to use the TLB method to raise funds. Oyo Hotels and Homes Ltd., a hospitality startup, obtained $ 660 mn. in debt capital from worldwide institutional investors in July. According to Oyo, the proposed issue was oversubscribed by 1.7 times, with close to $ 1 bn. in pledges from top institutional investors.

Manonmayi

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