Abu Dhabi’s SWFs in talks to join $500m Byju’s fundraise

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Abu Dhabi’s sovereign wealth funds are in active negotiations with Think and Learn Pvt Ltd, the parent of Byju’s, to be part of the $400-500 million fundraise that the company is planning, said people close to the development.

Qatar Investment Authority (QIA), which had been in advanced talks to invest $250-350 million in the edtech company, has pulled out of negotiations, people close to the company said. It had been planning to invest at a 40-50% discount to the $22 billion the company had commanded in its last round.

Byju’s is yet to file its financial results for the years ended March 2021 and 2022. The company has told lenders and debt investors that it is likely to finalise audited financial results for FY21 — approved by its official auditor Deloitte — by September 6. Any investment prior to the company announcing its financial results may raise eyebrows, experts said.

Sources close to the company said Byju’s potential investors are being given two options — either they come as equity investors at a $22 billion valuation or opt for a convertible pre-initial public offering instrument with a 20% discount to an IPO valuation band. The floor of the band is $22 billion while the ceiling is pegged at $35 billion. If the IPO timelines are delayed, the valuation discount will go up every six months.

ADQ of Abu Dhabi has been an investor in the company since last year. ET had reported June 12 last year that ADQ was among investors in a $350 million fundraise by the company, which had pegged valuation at $16.5 billion, making it the most valued edtech company in the world.

There is a possibility Byju’s may look to string together an investor consortium.

“Byju is in talks with the royalty at UAE,” said one of the persons cited above. “They are keen on India and the edtech story. ADQ is also an existing investor, so there is comfort. It’s not yet clear which Abu Dhabi investment vehicle will come in. It’s possible this round will be led by International Holding Company (IHC).”

Byju’s CEO Byju Raveendran declined to comment on speculation.

Syed Basar Shueb, CEO and managing director of IHC, didn’t respond to queries. IHC is an investment vehicle and conglomerate chaired by Sheikh Tahnoon bin Zayed al-Nahyan, UAE’s national security advisor and one of the country’s most influential figures.

QIA, the sovereign wealth fund of Qatar, led a $150 million round in 2019 along with Owl Ventures, when it had invested $50 million. Earlier this year, QIA and Byju’s launched a new edtech business and state-of-the-art research and development centre in Doha. The new entity will drive research and innovation to create learning solutions customised for students in the Middle East and North Africa (MENA) region. The company is also reportedly spending $40 million to be an official sponsor of the football World Cup in Qatar later this year.

“In the past too, the company has made such claims (about declaring results) and given deadlines but failed to comply. We shall wait and watch before commenting,” said an industry executive on the condition of anonymity. “This is a key reason why QIA’s investment committee chose to sit out even after being an existing investor and engaged in a dialogue for weeks.”

People in the know said QIA was divided over the investment with some preferring to wait till the audited numbers are out. These people were insisting on independent, third-party due diligence and forensic exercise to check the books of accounts. This is something Byju had been resisting, they said.

QIA declined to comment.

Sources close to the company said Byju’s will use the funds it raises for growth and acquisition. The company needs to pay $200 million to Blackstone for its billion-dollar buyout of Aakash Educational Services last April.

The company has so far raised nearly $6 billion from more than 70 investors, including General Atlantic, Sequoia Capital, Sofina and CPPIB, Bond Capital, Silver Lake Management, Naspers Ltd and Tiger Global. It has been trying to close a funding round of $800 million but the global technology rout weighed on valuations, compounded by audit delays. It has been one of the most aggressive online education companies with multiple acquisitions around the world.

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