Edtech giant Byju’s has closed a Rs 2,000 crore ($250 million) round from Davidson Kempner Capital Management, a US-based investment firm, in a structured instruments deal, according to people familiar with the matter.
This is part of an ongoing $1-billion funding round the Bengaluru-based firm is raising in a mix of equity and structured instruments at its current valuation of $22 billion.
Around $700 million of the $1 billion is expected to come through equity, for which Byju’s is in talks with existing and new investors. These include investors like Abu Dhabi’s sovereign wealth fund ADQ.
Byju’s was in talks with Davidson Kempner Capital Management, Oaktree Capital Management, and Apollo Management, among others, and decided to move ahead with Davidson Kempner, according to the sources.
“Davidson Kempner Capital does very deep due diligence before investing,” said a person.
Industry sources said that capital raised from Davidson Kempner was a loan and had an equity upside linked to the company’s subsidiary Aakash Educational Services’ (AESL’s) public listing in the near future.
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The firm is planning an Rs 8,000-crore initial public offering (IPO) of its subsidiary, Aakash, according to sources. Aakash was acquired by Byju’s for $1 billion in 2021.
Byju’s declined to comment on the development.
The new funding round is expected to help Byju’s meet its financing needs amid a funding winter. It is also expected to pay a portion of the $1.2 billion term loan B that the company raised in 2021. Byju’s had reportedly sought more time from lenders to renegotiate an agreement governing a loan that is in breach of covenants, according to people familiar with the matter.
The deal was closed at a time when the Directorate of Enforcement (ED) recently conducted search and seizure operations at three premises of Byju’s under the Foreign Exchange Management Act (FEMA).