World’s Leading E-Learning Firm, BYJU’S, Reportedly Plans to Go Public via Richly Valued SPAC
In what would be a landmark event in the education technology (edtech) business, BYJU’S, a fast-growing private company, reportedly may go public in the first few months of 2022 via a SPAC deal with SPAC sponsor Churchill Capital. (Churchill Capital was Lucid Group, Inc.’s sponsor in its successful SPAC transaction.) BYJU’S could potentially raise US$4 billion from investors and have an initial public market value of a cool US$48 billion.
Based in Bangalore, India, BYJU’S facilitates online student learning with full programs and exam preparation classes. In a nutshell, BYJU’S is a rapidly growing, voraciously acquisitive (on a worldwide basis), highly valued company backed by a veritable “Who’s Who” list of private equity (PE) and venture capital (VC) investors.
The e-learning market, estimated to be $250 billion in 2020 by the market research firm Global Market Insights, looks to grow rapidly for many years. Global e-learning revenues could reach US$1 trillion by 2027, about 35% of which would be North America- (primarily the U.S.) based, and 26% in the Asia Pacific region. BYJU’S aims to be a major player in both regions.
BYJU’S was founded in 2008 by Byju Raveendran (still the company’s CEO) and his wife Divya Gokulnath as on offline teaching center. Mr. Raveendran for years taught math to as many as 25,000 students at a time in a stadium in Bangalore. The company transitioned into digital courses in 2015.
Through its app, BYJU’S originally prepared students pursuing undergraduate and graduate-level courses. It has expanded its catalog to serve students of all ages. Tutors use real-life objects to help students understand complex subjects. The company employs original content, video lessons, and interactive activities to personalize learning for each student.
As the COVID-19 pandemic began to spread worldwide in the spring of 2020, India’s government enforced a nationwide lockdown that included widespread school closures, which in turn prompted many parents to explore online education services for their children. Broadly speaking, Indians are reluctant to pay for online services, but they are quite willing to pay for online educational help for their children. (Facebook has around 400 million users in India but derives little profit in that country.)
In the first six months of the pandemic, BYJU’S added 20 million new students to its platform. As of September 2020, the company had more than 64 million registered students and 4.2 million paid subscriptions. These figures have now reached approximately 115 million and 7 million, respectively.
| Number of Registered Users (Millions) | Number of Paid Subscriptions (Thousands) | |
| December 2021 | 115 | 7,000 |
| July 2021 | 100 | 6,000 |
| April 2021 | 80 | 5,500 |
| September 2020 | 64 | 4,200 |
| July 2019 | 35 | 2,400 |
| July 2017 | N/A | 450 |
At the potential US$48 billion valuation, BYJU’S would command a giant valuation multiple — perhaps ~30x current revenues. The company is generally expected to record US$1.5 billion of sales and a small profit in fiscal 2022 (the year ending March 2022).
The US$48 billion valuation would also represent more than a doubling of its implied US$18 billion present private market valuation, which was established in a funding round just two months ago. Many well-known early-stage investors (Silver Lake, Tiger Global, General Atlantic, and Mark Zuckerberg) would earn windfall returns. Since late 2018, BYJU’S has raised more than US$1.8 billion in private capital from some of the world’s best-known PE/VC sources.
| Amount Raised (US $ Millions) | BYJU’S Implied Value Post-Raise (US $ Millions) | Investors in Financing Round | |
| October 2021 | $300 | $18,000 | Oxshott Capital Partners, Edelweiss, Verition Master Fund |
| June 2021 | $350 | $16,500 | UBS Group, Zoom founder Eric Yuan, Blackstone, Abu Dhabi government fund, Phoenix Rising |
| September 2020 | $500 | $10,800 | Silver Lake, Tiger Global, General Atlantic, Owl Ventures |
| June 2020 | $10,500 | BOND (Mary Meeker’s company) | |
| July 2019 | $150 | $5,750 | Qatar Investment Authority, Owl Ventures |
| December 2018 | $540 | $4,000 | Naspers (an early investor in Tencent), Canadian Pension Plan Investment Board |
| July 2017 | $60 | $800 | Tencent |
| December 2016 | $15 | World Bank’s IFC fund | |
| September 2016 | $50 | Chan Zuckerberg Initiative, Sequoia Capital, Sofina, Lightspeed Ventures, Times Internet Ltd. | |
| March 2016 | $75 | Sequoia Capital, Sofina |
The impending offering by BYJU’S will likely impact other e-learning stocks like Coursera, Inc.(NYSE: COUR), Stride, Inc. (NYSE: LRN) and 2U, Inc. (NASDAQ: TWOU). As a group, these stocks likewise trade at high valuations (though not as high as BYJU’S promises to be) and have been underperforming for months.
However, it is too early to tell whether the BYJU’S offering will impact, say, Coursera in a positive or negative direction. On the one hand, BYJU’S expected lofty revenue multiple could bring Coursera’s up as well. On the other hand, investors could decide they have to cut exposure to Coursera to make room for a BYJU’S position.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
