Edtech unicorn Byju’s is looking to raise at least $500 million through Term Loan B borrowings in the United States. Byju’s has already hired US-based investment banks JP Morgan and Morgan Stanley for the job. The deal could be upsized "depending on the demand", a person familiar with the matter told Mint.
Byju’s isn't approaching a traditional bank and rather going for a Term Loan B as such borrowings usually mature within six to seven years. Additionally, Term Loan B borrowings have a floating interest rate and a large part of the principal and accrued interest is to be paid on maturity.
Besides, investors in the US have been finding the Indian tech ecosystem attractive in the wake of dozens of tech companies becoming unicorns in India. Therefore, Byju’s is looking to secure funds in the West where the interest rates are low and there are massive amounts of liquidity with investors.
The company has to opt for a debt as it has already spent billions of dollars on acquisitions this year, according to the Mint report. The report adds that the company plans to use the money raised through the debt instrument for further acquisitions. Besides, some portion of the money will also be used as working capital.
In the past few months, Byju’s has acquired higher education platform "Great Learning" for $600 million, kids’ digital reading platform "Epic" for $500 million, online test preparation platform "Gradeup", and test preparation provider "Aakash Educational Services" for $1 billion.
As of September, Byju’s had 6.5 million paid subscribers. Founded by Byju Raveendran, the edtech recorded nearly 80 percent growth in consolidated net sales in the financial year 2019-20 as compared to the previous year.
The unicorn, operated by Bengaluru-based Think and Learn Private Limited, pocketed Rs 2,380 crore income in FY20 as against Rs 1,305 crore in the previous year, according to its regulatory filing. However, the annual expenses of the company shot up by a massive 119.50 percent to around Rs 3,022 crore during 2019-20. Consequently, the consolidated losses for Byju’s rose to Rs 262 crore in FY20 as compared to Rs 8.82 crore in FY19.