Edtech unicorn Byju’s raises $1.2 billion via term loan

India’s most valuable privately held startup, Byju’s, has raised $1.2 billion via a term loan from the overseas market. The edtech firm, valued at $18 billion, had earlier planned to raise $700 million, however, the round was upsized, as per people familiar with the matter.

The company has taken advantage of the interest rate arbitrage available in the global markets, with record low rates, said the people. Byju’s has raised capital at Libor plus 550 basis points, which is much lower than what is available in the domestic markets.

Libor, or London Interbank Offered Rate, is the benchmark at which overseas interest rates are set and borrowings take place. Generally, the six-month Libor is considered for such loans. On Monday, the rate was 0.22%.

“This is the largest unrated TLB from India and Asia as well as one of the largest unrated TLBs globally. It reflects the strong credit story of the company as one of the largest and fastest growing global edtech platforms,” said Kamal Yadav, managing director at Morgan Stanley India.

A TLB, or Term Loan B, is also referred to as an institutional term loan. Byju’s is working with US investment banks JPMorgan and Morgan Stanley to structure the loan.

The Byju Raveendran-led edtech firm plans to use the proceeds to fund general corporate purposes offshore, including to support business growth in North America and fund potential inorganic growth opportunities.

A company spokeswoman declined to comment.

The decacorn has been acquisitive in the last 24 months where it has made a string of acquisitions across markets to fuel its growth ambitions.

Byju’s has
spent more than $2 billion on acquisitions over the past few months, triggering consolidation in an industry that has gained due to the pandemic.

In July, Byju’s acquired US-based kids learning platform
Epic in a $500-million cash-and-stock deal.

It also acquired professional and higher education platform
Great Learning for $600 million for cash and stock.

Great Learning is the Bengaluru-based company’s second biggest acquisition. In the past, it also
acquired coaching institute Aakash Education and online coding classes provider
Whitehat Jr.

Earlier this year, Byju’s
expanded in overseas markets through its ‘Future School’ offering, entering the US, UK, Brazil, Indonesia and Mexico.

The company is looking at bolstering its presence in the North American market and will be announcing another strategic investment soon, said one of the people.