According to people familiar with the matter, online education provider Byju’s, India’s most valuable startup, is in talks to raise between $400 million and $600 million and then is accelerating plans for an initial public offering next year.
The Bangalore-headquartered company could kick off pre-IPO fundraising in a few weeks at a valuation of about $21 billion, said a person who asked not to be named, as the details are private. Fundraising is likely to be split roughly equally between equity and debt.
byju’sThe company, led by former teacher Byju Raveendran, is aiming to file its initial IPO document in the second quarter of next year, soon after the end of its fiscal year in March, two people said. It previously saw a timeline of 12 to 24 months. People said the startup and its bankers are discussing a valuation of $40 billion to $50 billion, although the final determination will depend on financial results and investor demand.
Banks involved in the talks include Morgan Stanley, Citigroup Inc. and JPMorgan Chase & Co., one person said. The same banks are involved in the current fundraising.
Byju’s, Morgan Stanley, JP Morgan and Citi declined to comment. Two people said investment bankers have also offered options such as an IPO in the US or merger with a Special Purpose Acquisition Company or SPAC, but those options are less likely than listing in India.
India’s technology sector has grown this year, with IPO fundraising on track to reach record levels. Venture capital firms have also increased their investments in the country, fueled by Communist Party actions in China, which have made that market less hospitable.
Byju’s was valued at $16.5 billion after raising about $150 million from UBS Group AG, Bloomberg News reported in April. It is ahead of the country’s second most valuable startup, digital payments provider Paytm, according to market research firm CB Insights. Meanwhile, Paytm has filed its preliminary documents for India’s biggest ever IPO worth $2.2 billion.
One person said Byju has the potential to become a global leader in education technology, especially because Beijing’s recent reforms have placed severe restrictions on similar startups in China. The person said this has attracted a high level of investor interest and suggests a new target valuation of $21 billion could be achieved.
The online education startup, formally called Think and Learn Private, has major global investors including Facebook founder Mark Zuckerberg’s Chan-Zuckerberg initiative, Naspers Ltd., Tiger Global Management and private equity giant Silver Lake Management.
In a recent conversation with Bloomberg News, founder Raveendran said that the startup is targeting a revenue of 100 billion rupees ($1.4 billion) with a 20% margin in the year ending March 2022. Byju’s has been on acquisitions over the past year, acquiring startups that offer coding lessons, professional learning courses and test prep classes for competitive Indian exams.
The company added 45 million students to its platform as the pandemic peaked in India last year and said it had over 100 million users on the app in July. It has some 6.5 million paid subscribers and has an annual renewal rate of 86%.
This story has been published without modification in text from a wire agency feed.
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