Byju Raveendran, the founder and CEO of Byju‘s, is reportedly in talks with a number of domestic and foreign banks to get a $400 million loan to finance 50% of the $800 million, or Rs 6,000 crore, investment round of the edtech giant.
According to them, the company took this choice as part of its strategy to show investor interest at a time when values are being pressured globally and to show the founder’s belief in the company as he leads the round.
People with knowledge of the matter claim that Sumeru Ventures, Vitruvian Partners, and BlackRock also contributed to this $800 million round, increasing the Bengaluru-based company’s value from $18 billion to roughly $22 billion.
“Raveendran is in talks to raise $400 million as a loan against shares with a number of domestic and international banks. This might help him keep investor interest during a period when values are under pressure, according to one.
As part of the “confidence-building efforts,” the founder must be shown to be leading the investment round in addition to telling current investors “not to worry about the valuation.”
Raveendran’s ownership in the company increased from 22% to around 25% after investing $400 million, which the corporation referred to as a “personal investment.”
Someone else made the assumption that he might be receiving this loan with a favorable interest rate. may have given personal guarantees and security to the banks in addition to pledging the shares in order to secure this loan.
The most valuable edtech company in the world, Byju’s, is concentrating on growing its clientele internationally and considering other acquisitions. 150 million people worldwide are learning it. Churchill Capital and the corporation are in discussions about raising $4 billion so that they can go public through special-purpose acquisition companies (SPACs). If the transaction is successful, its valuation may more than double to around $48 billion, according to sources.
Byju’s surpassed Paytm’s $16 billion valuation in June 2021 to become India’s most valuable unicorn, which subsequently underwent an IPO.
The sources claim that Byju’s intends to go public this year in the US. India, though, is also a viable choice. It might list first in the US and second in India, or the other way around. Its two largest and most important markets are the US and India.
The corporation anticipates $3 billion in sales for the upcoming year, according to persons with knowledge of the circumstances. About $1.5 billion in revenues had already been reached.
Not just Byju Raveendran, but other tech entrepreneurs have also obtained loans to support their own businesses. In 2019, Ritesh Agarwal, the founder and CEO of OYO Hotels and Homes, received a $2 billion loan from Japan-based banks Nomura and Mizuho. Agarwal would spend $2 billion in the hotel firm, according to OYO Hotels and Homes.
Agarwal made this investment through RA Hospitality Holdings, the company he founded when he was 19 and started the hotel chain in 2013. His financial partners and international institutional banks supported him in a $2 billion primary and secondary management investment round, which was still pending regulatory and shareholder clearances.
The business said that this decision was driven by significant growth, higher profits, and exceptional customer experience improvements. Early investors in OYO, Lightspeed Venture Partners and Sequoia India, were selling a portion of their interests to assist the founder in increasing his stake and thereby commitment, while still being deeply committed to the company’s long-term goals.
The IPO-bound mobility platform Ola announced in December of last year that it had successfully raised $500 million via a Term Loan B (TLB) from prestigious worldwide institutional investors. The Bhavish Aggarwal-led Ola reported that investors responded to the proposed loan offering with astounding enthusiasm, pledging a total of about $1.5 billion in interest and commitment.
With a term loan, borrowers receive a one-time payment in exchange for certain borrowing conditions. Term loans are usually provided to small businesses, according to experts, when they need money to purchase machinery, a new facility for their production processes, or any other fixed assets.
By taking a loan.
Rs. 6000 Crore