Byju’s, India’s most valuable start-up, may follow in the footsteps of ReNew Power to list in the US through the special purpose acquisition company (SPAC) route.
According to a Bloomberg report, the ed-tech major is considering a merger with one of Churchill Capital’s SPAC’s. It said the Byju Raveendran- led firm held talks with several potential SPAC partners and has made progress with Michael Klein’s Churchill Capital.
Churchill Capital VII had raised more than $1.3 billion in February and trades on the New York Stock Exchange.
The report added that under the preliminary terms discussed, Byju’s would raise up to $4 billion and seek a valuation of about $48 billion. It was valued at $21 billion, according to market research firm CB Insights. While Sebi is understood to be considering a framework for SPAC, its popularity has gone up in mature markets like the US over the past few years.
There is speculation that many Indian start-ups are looking to tap this route, particularly after ReNew Power showed the way in August.
The renewable energy firm got listed on the Nasdaq through SPAC after combining with RMG Acquisition Corporation (RMG II).
A SPAC, also known as a ‘blank-cheque company’, is largely a shell firm which raises money through an initial public offering (IPO) and later merges or acquires an unlisted firm within a timeframe of two years. SPACs are usually formed by private equity funds or financial institutions with expertise in a particular industry or business sector.
One of the main advantages of this mechanism is that it saves companies the time that is otherwise consumed in bringing out an IPO.
In the case of ReNew Power, RMG II became a wholly owned subsidiary of its arm ReNew Energy Global plc and the company received $610 million in net proceeds.
The report, however, added that while announcement from Byju’s could come as early as January, the negotiations are not final and that the Indian start-up could even consider a domestic IPO in 2022.
Byju’s could thus join the likes of Paytm, Zomato and Nykaa, which have used the primary market frenzy to get listed on the bourses. Founded in 2015, Byju’s has made a series of acquisitions to consolidate its space in the sector.
Recently, it acquired GeoGebra of Austria for an undisclosed sum after purchasing Aakash Educational Services Ltd (ASEL), Epic and Great Learning. The company had launched its flagship product, Byju’s — The Learning App, for classes 4-12 in 2015 and the app has over 11.5 crore registered students and 70 lakh annual paid subscriptions. The company is backed by investors such as Chan-Zuckerberg Initiative, Naspers, General Atlantic, Tencent, Sequoia Capital.
