Churchill Capital in talks with Byju's to provide $4 bn at $48 bn valuation

The world’s most valuable edtech start-up Byju’s is in talks with Churchill Capital to raise $4 billion and go public through the special purpose acquisition company (SPAC) route.

The round is expected to more than double the valuation of the Bengaluru-based firm to about $48 billion, according to people familiar with the matter. The Byju Raveendran-led firm is currently valued at $21 billion, the first domestic start-up to reach the mark.

“Byju’s has an offer of $4 billion from Churchill Capital at a $48-billion valuation,” said a person in the know. “The company is yet to decide whether to accept this offer or not.”

If the fundraise materialises with Churchill Capital, the blank check company founded by dealmaker and former Citi executive Michael Klein, Byju’s can merge with one of Churchill’s SPACs and list in the US market by mid-2022.

Industry sources said that regulations in India don’t allow companies like Byju’s, which have global operations, to go for a traditional initial public offering (IPO) in the US.

“There is value to Byju’s having a global listing via a US IPO, and SPAC is a possible route,” said a person. “The firm is planning to go public by mid-2022 in the US. But India is also a strong option. It can do a primary listing in the US and a secondary listing in India or vice-versa. Both the US and India are large and key markets for it.”

According to the sources, the $48-billion valuation has been calculated on the basis of the fact that Byju’s expects to hit a revenue of $3 billion for the calendar year 2023. It has already crossed revenue of about $1.5 billion. Byju’s declined to comment on this development.

The edtech major has raised about $4.5 billion since it was founded 10 years ago by Byju Raveendran — a former teacher and the son of educators from Azhikode village in Kerala — and his wife Divya Gokulnath.

It is now a leading firm in offering personalised learning programmes to school students in India. Over 115 million students learn from the app, while 7 million have taken a paid annual subscription with an annual renewal rate of 86 per cent.

According to analysts, the listing would help accelerate the firm’s plan to become one of the largest players in the space in the US, with a target to hit revenues of $1 billion in the next three years.

The start-up is on an acquisition spree in India and globally as the pandemic has accelerated the adoption of online education. Students and professionals are looking to upgrade their skills, while schools and offices remain shut.

The start-up has now acquired about 9 companies in India and the US this year and spent more than $2 billion in the past several months on these acquisitions, according to sources.

US acquisitions

In September this year, it acquired US-based Tynker, a leading K-12 creative coding platform, for about $200 million, according to the sources.

In July this year, the firm bought US-based digital reading platform Epic for $500 million. In 2019, it had signed a stock-and-cash deal to acquire US-based educational gaming company Osmo for $120 million.

In August 2020, Byju’s bought WhiteHat Jr, which teaches coding to children and has a major presence in the US market, for $300 million. Earlier month, it acquired Austria-headquartered math learning platform GeoGebra for about $100 million.

Some of the other deals include the $1-billion buy of New Delhi-based Aakash Educational Services in April and the $600-million acquisition of Singapore-headquartered Great Learning, a leading global player in professional and higher education.

The firm recently appointed ex-Bain & Company executive Rachna Bahadur as senior vice-president to lead the global expansion plans.