BYJU’S Secures $250 Million in Debt Funding from Davidson Kempner, Providing a Sigh of Relief
- ByStartupStory | May 13, 2023
According to reports, edtech company BYJU’S has raised $250 million through structured investments from US-based alternative investment firm Davidson Kempner. The company is also said to be near securing an additional $700 million from investors, as it prepares for the public listing of its subsidiary Aakash, which offers coaching services. Sources cited by TechCrunch indicate that the funds will help BYJU’S move forward with its plans for Aakash’s public listing.
The firm is reportedly seeking to raise a total of $1 billion, with the remaining capital expected to come from a sovereign fund in the form of a convertible note within the next two weeks. Structured investments are investment products linked to securities that can later be converted into shares during events such as an IPO.
Reports earlier this week suggested that BYJU’S was close to securing $1 Bn funding at its current valuation of $22 Bn, through a combination of equity and structured instruments. The edtech giant was reportedly in advanced discussions with a Middle East-based sovereign fund to lead an equity round of $700 Mn, while also aiming to raise $300 Mn via structured instruments from US asset management firms like Oaktree Capital Management and Apollo Management.
The infusion of funds into BYJU’S seems to have started, even though the entire deal was anticipated to conclude within a month’s time. The edtech company is reportedly planning to use a portion of the new funds to prepay some of the term loan B (TLB) worth $1.2 Bn it had raised in 2021.
BYJU’s has secured a significant amount of funding during a funding winter that has resulted in a funding crunch in the Indian startup ecosystem. The funding provides some relief for BYJU’s, which has faced negative publicity, including the dismissal of over 4,00 employees, ED raids on its premises, accusations of mis-selling, scrutiny over accounting practices, and delays in filing financial statements. As competitors seek to bolster their offline offerings and expand their cash-intensive offline operations, the startup must defend its territory.
The new funding will offer much-needed relief to BYJU’s, enabling it to enhance its capabilities. The company may allocate a portion of the funds to strengthen its financial position, particularly as it proceeds with the Aakash subsidiary’s listing. According to reports, BYJU’s is in the final stages of discussions with Citi and Goldman Sachs to advance Aakash’s IPO plans. The firm has also obtained board approval for the IPO and is purportedly preparing to submit the necessary paperwork.
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