Edtech giant Byju's may soon raise $1 billion from ADQ and Oaktree

Once edtech giant closes it, this will be one of the largest funding rounds

Edtech giant Byju’s is in the process of raising $1 billion in a mix of equity and structured instruments at its current valuation of $22 billion, according to the people familiar with the matter.

This will make it one of the largest funding rounds amid a funding winter and macroeconomic uncertainty, which has resulted in an increasing number of firms laying off employees in a bid to conserve cash and focus on profitability. Byju’s is expected to close the round in the next few weeks.

“The final stages of due diligence are going on. The money is expected to come soon,” said a person familiar with the matter.

Around $700 million of the $1 billion is expected to come through equity, according to the sources. They said Byju’s is in talks with Abu Dhabi’s sovereign wealth funds like ADQ to raise this tranche. The remaining $300 million would be raised via structured instruments. For this, Byju’s is in talks with investors like Davidson Kempner Capital Management, Oaktree Capital Management, and Apollo Management.

“These investors do deep due diligence before investing,” said another person familiar with the matter. “This will be a huge win for Byju’s founder Byju Raveendran once he closes the deal. And this would be the largest funding round in the tech winter.”

Byju’s declined to comment.

This comes at a time when the Directorate of Enforcement (ED) recently conducted search and seizure operations at three premises of Byju’s under the Foreign Exchange Management Act (FEMA). These three premises were two business units and one residential property in Bengaluru connected with Byju Raveendran and his company ‘Think & Learn Private Limited’.

During the ED action, various incriminating documents and digital data were allegedly seized. The searches also revealed that the company allegedly received foreign direct investment of about ~28,000 crore during between 2011 and 2023. Legal experts had said that the development was likely to worry existing and potential future investors. They may demand an explanation and this may delay the fundraising plans. However, other experts said it was an investigation and nothing had come out of it yet.

“If any law was violated, the ED would have come out with a charge sheet,” said a person familiar with Byju’s strategy. “Also all the foreign investors who do deals in India go through FEMA due diligence.”

Byju’s has raised $5.8 billion in total from investors like Qatar Investment Authority (QIA), Sumeru Ventures, Vitruvian Partners, BlackRock, Chan Zuckerberg Initiative, Sequoia, Silver Lake, Bond Capital, Tencent, General Atlantic and Tiger Global. The firm has over 150 million learners.

The new funding round is expected to pay a portion of the $1.2 billion Term Loan B that the company raised in 2021. Byju’s reportedly had sought more time from lenders to renegotiate an agreement governing a loan that is in breach of covenants, according to people familiar with the matter.

The firm is also planning an ~8,000-crore initial public offering (IPO) of its subsidiary, Aakash Educational Services (AESL), according to sources. Aakash was acquired by Byju’s for $1 billion in 2021.