Byju’s Bold Move: $200 Million Fundraising Shocker and Lenders’ Insolvency Drama Unveiled!

Byju’s, the prominent ed-tech platform, is on the lookout to secure funding of up to $200 million through an equity rights issue. This initiative is set at an enterprise valuation range of $220-250 million. The company plans to offer equity at this relatively lower valuation specifically for this tranche of the issue, as per sources quoted by PTI.

Fundraising Details and Objectives

The board of Think and Learn Private Limited (TLPL), the parent company of Byju’s, officially announced the launch of the fund-raising effort. The company aims to generate $200 million through a rights issue accessible to all its equity shareholders. The funds are intended to support the ongoing efforts to drive growth and achieve operational sustainability, according to a statement from the ed-tech platform. The rights issue is scheduled to conclude by the end of February.

Unique Valuation Strategy

While the overall valuation of the firm is considerably higher, Byju’s has strategically chosen this lower valuation solely for the rights issue. The peak valuation of the ed-tech company was reached in March 2022, driven by the increased demand for online education during the Covid-19 pandemic when sector competition was limited.

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Founder’s Commitment and Operational Milestones

The statement highlights the founders’ commitment, mentioning that as the largest shareholders, the founders of Byju’s have personally invested over $1.1 billion in the last 18 months. The primary purpose behind the current funding round is to finance ongoing capital expenditures and support general corporate objectives. Byju’s founder, Byju Raveendran, expressed in a letter to shareholders that the company is now approaching operational profitability, being less than a quarter away, thanks to the resilience of its business model.

Byju’s Faces Insolvency Petition by Lenders

In a significant development, a substantial portion of lenders who provided Byju’s with the $1.2 billion Term Loan B (TLB) have filed an insolvency petition with the National Company Law Tribunal (NCLT) Bengaluru. Although the specifics of the filing have not been made public, Byju’s dismisses the claims as “premature and baseless.”

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Lenders’ Action and Byju’s Response

The insolvency petition has been filed by over 80 percent of the lenders associated with the term loan. Simultaneously, Byju’s reports ongoing negotiations with TLB lenders to settle the entire debt by raising funds through the sale of certain subsidiaries. Responding to the petition, a Byju’s spokesperson stated that the validity of lenders’ actions, including term loan acceleration, is under challenge in various proceedings, including before the New York Supreme Court. Consequently, any proceedings initiated by lenders before NCLT are deemed premature and baseless by Byju’s.

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