Byju’s undertakes strategic review of all its assets as it looks to focus on core biz, generate cash

Byju's is further considering the sale of some of its other non-core assets to unlock value and manage its debt repayment.

By  MoneycontrolSep 12, 2023 2:14 PM
Byju’s undertakes strategic review of all its assets as it looks to focus on core biz, generate cash
Byju's’ decision to initiate a strategic review of its subsidiary companies coincides with the company's crucial need to strengthen its financial position, as it faces immediate liquidity challenges and aims to repay the entire $1.2 billion term loan B, which it acquired in November 2021, within the next six months. (Image source: Moneycontrol)

Byju’s, India’s most-valued startup, is undertaking a strategic review of all the assets it acquired in the last few years, as it looks to sell non-core subsidiaries and shift its attention back to core, profitable segments, people aware of the matter told Moneycontrol.

Byju's, which has over 30 subsidiaries, is planning to refocus its efforts on K-12 education (kindergarten to class 12), test preparation, offline coaching for K-12, and profitable niches related to these segments, the sources cited above said.

The company is also keen on revitalizing K-12-related verticals, such as code learning platforms like WhiteHat Jr and Tynker. Byju's is working with advisors to conduct this strategic review.

Byju's, which has already put upskilling platform Great Learning and reading platform Epic on the block, is expecting to generate about a billion dollars from the sale, according to one of the persons quoted above.

The company is shifting its focus towards strengthening its operations in India, as it looks to retain only certain assets overseas.

“Byju needs to shrink, and this is a step in that direction. It cannot be the sprawling edtech that it was,” said a second person quoted above.

Byju's declined to comment.

During its heydays, the company raised a record $6 billion in equity and debt and made more than 15 acquisitions, with a cumulative worth of $3.5 billion. Byju’s' buying spree, at one point, provided fodder for memes on social media, with many people joking that the edtech giant might even acquire government-run school boards next. Some of its notable acquisitions during this period included Aakash Educational Services, the US-based Tynker, WhiteHat Jr, Osmo, Great Learning, Epic, and Toppr, among others.

Byju's’ decision to initiate a strategic review of its subsidiary companies coincides with the company's crucial need to strengthen its financial position, as it faces immediate liquidity challenges and aims to repay the entire $1.2 billion term loan B, which it acquired in November 2021, within the next six months.

On September 11, the company submitted a proposed amendment to its lenders, outlining a plan to repay the full loan amount in less than six months. Additionally, it pledged to pay $300 million within the next three months, contingent on the lenders' acceptance of the proposal.

Byju’s has been looking to raise fresh funds since the start of the year but has not managed to close the round yet, prompting the company to explore other plans for shoring up its finances. However, a source in the know said that the company’s fundraising plans are on track and Middle East-based sovereign wealth funds have shown interest to participate in the funding round.

Byju’s is also negotiating with Davidson Kempner, a US-based asset management company, which lent it $250 million in May via structured debt, based on the future cash flows of Aakash Educational Services, the edtech giant’s largest asset. However, the US-based AMC withheld approximately $150 million because Byju's negotiations with its lenders did not progress well.

Byju's also had a technical default on the Davidson Kempner loan. This prompted Byju Raveendran to raise funds to repay it, to avoid losing control of his most valuable asset, Aakash Educational Services. Byju's had offered Aakash's shares as collateral for the Davidson Kempner loan.

Byju’s, founded over a decade back by former teacher Raveendran, had soared to new heights in March 2022 after it raised a massive $800 million funding round, at a $22 billion valuation, becoming India’s most-valued startup.

But the company has come under fire since then for a host of issues including delayed financial results, the resignation of its auditor, Deloitte, and three key board members–Peak XV Partners (Sequoia Capital India)’s GV Ravishankar, Prosus’ Russel Dreisenstock and Chan Zuckerberg Initiative’s Vivian Wu.

The company has also come under fire for employee-related issues including delayed provident fund payments, mass layoffs, and holding back of incentives.

However, the company has been looking to rebuild itself from the crisis. It has roped in industry veterans TV Mohandas Pai and Rajnish Kumar to advise its board on operational matters. The company also appointed Infosys veteran Richard Lobo as its human resources head to address employee-related issues.

First Published on Sep 12, 2023 2:14 PM

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