Byju’s In Talks With TPG, Sovereign Funds For Funding Amid Mounting Debt: Report

Byju’s is in separate talks with creditors to renegotiate an agreement governing a $1.2 billion loan that’s in breach of covenants

World's most valuable edtech start-up Byju's is in negotiations with investors to raise more than $500 million to prevent a potential debt crisis, according to a report by Bloomberg. The report cites people familiar with the matter saying that Byju’s is in talks with several investment firms, including TPG and two Middle-Eastern sovereign wealth funds. 

The investment firms have begun due diligence on the edtech company, which is hoping to keep its valuation steady at about $22 billion during the financing, people familiar with the matter told Bloomberg.

Several investment firms including TPG and two Middle Eastern sovereign wealth funds have begun due diligence on the Indian company, which is hoping to keep its valuation steady at about $22 billion during the financing, people familiar with the matter told Bloomberg. Negotiations are ongoing and it’s unclear if the prospective investors will go ahead with a deal. 

The company, which has sacked thousands of employees and has taken deeper cuts, has been unable to achieve profitability at group level amid mounting losses.

The report said the firm, which was on an upwards trajectory during the pandemic, is in separate talks with creditors to renegotiate an agreement governing a $1.2 billion loan that’s in breach of covenants.

Last month, Bloomberg reported that some of the creditors are seeking quicker repayment of the loan using cash reserves of about $850 million from Byju's' US unit. The edtech company has appointed an adviser to discuss tweaks in covenants of the term loan B with creditors. 

In the last round of funding in October, Byju’s was valued at $22 billion. During the pandemic, Byju’s raised billions of dollars in capital from General Atlantic and Tiger Global. However, after the tech downturn worldwide, the company faces multiple challenges, including a long-delayed filing of audited financial statements.

The company is also finalising plans for a $1 billion initial public offering of its tutoring business Aakash Educational Services, and may consider IPOs of other units, Bloomberg reported in November. There were also reports that Byju Raveendran, the co-founder, and CEO of Byju's, is in talks to raise his stake to 40 per cent in Think and Learn Pvt Ltd., the parent company of Byju's.