Byju's in talks with 3-4 strategic buyers to sell Epic for $450 million

Byju's and its term loan B lenders then decided to postpone the ongoing disagreement in the US courts and achieve an out-of-court resolution

Byju’s is in talks with three-four strategic buyers, including Joffre Capital Ltd and language learning platform Duolingo, to sell one of its key assets, US-based digital reading platform Epic, for about $400-$450 million, according to sources.

With this, the beleaguered edtech firm wants to meet various commitments, including repaying its entire $1.2 billion term loan B (TLB) within six months.

“The binding offers of the bidders to acquire Epic are expected to come in the next few weeks after the due diligence is complete,” said a person familiar with the matter.

He added, “Moelis & Company, a global investment bank, is conducting the sale process.” Byju’s declined to comment on the matter.

The talks with Joffre Capital and Duolingo were first reported by Bloomberg.

The edtech firm is locked in a dispute with lenders in the US over a missed interest payment on a $1.2 billion TLB.

This year, Byju's filed a suit against US-based investment management firm Redwood, challenging acceleration of the $1.2 billion TLB facility and to disqualify the lender for its “predatory tactics.” Byju's also skipped an interest payment of about $40 million on the loan.

Byju's and its TLB lenders then decided to postpone the ongoing disagreement in the US courts and achieve an out-of-court resolution.

In a surprise move, the firm recently offered to repay the entire TLB to its lenders in less than six months through the sale of its assets.

Byju's has decided to put two of its key assets — Epic and Great Learning — on the block to generate $800 million-$1 billion in cash to address various financial challenges, according to sources. 

“Except for Aakash Educational Services Limited (AESL), any asset which is non-cash is disposable right now,” said a person familiar with the company’s strategy.

He added, “Besides Epic and Great Learning, the company is also planning to sell its other major assets, including Osmo, the US-based educational gaming company.” It had acquired the firm for $120 million.

In 2021, Byju’s was on an acquisition spree to grow rapidly in India and globally as the pandemic accelerated the adoption of online education.

In July 2021, Byju’s acquired Epic for $500 million, in a bid to expand its US footprint. It got access to 2 million teachers and 50 million children in Epic’s global user base.

During the same month, it bought Singapore-headquartered Great Learning for $600 million. 

However, Byju’s bore the brunt of returning to normal after Covid as students went back to physical brick-and-mortar education from the online mode. 

“Byju’s has been looking to sell some of its ancillary businesses both in India and the US to generate cash and pay loans,” said Salman Waris, managing partner at tech law firm TechLegis Advocates & Solicitors.

He added, “It appears that it wants to focus on its core business, which is to provide tutoring services to the school kids.”