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Tuesday, February 27, 2024

Byju’s in talks with JPMorgan, other banks for its tutoring arm’s $1B IPO

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Byju’s is concluding plans for a $1 billion initial public offering of its tutoring arm. JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc., and Morgan Stanley are among the international banks in talks with the edtech giant.

According to people familiar with the issue, Byju’s, India’s largest online education provider, is nearing completion of plans for its tutoring business, Aakash Educational Services, to go public for $1 billion.

As it searches for arrangers for the listing, the company is in discussions with at least four foreign banks, including JPMorgan Chase & Co.,  Goldman Sachs Group Inc., Citigroup Inc., and Morgan Stanley, as well as Indian banks like Axis Bank Ltd, and Kotak Mahindra Bank Ltd.

The asset might be worth between $3.5 billion and $4 billion, according to the source. According to the persons, a Draft Red Herring Prospectus, which is necessary to begin the IPO process in India, is likely to be submitted in January or February, and Byju’s may pick the lead bank within two weeks. According to them, Byju anticipates an IPO in late August or early September.

The spokesman for Byju did not react. Representatives from Citigroup and Goldman Sachs declined to comment, while JPMorgan, Morgan Stanley, Kotak, and Axis took their time responding to requests for comment.

Citigroup is one of the front-runners to oversee the IPO, having supported Aakash in preparing for its Indian stock market debut a few years ago. The plans were scrapped, and Blackstone Inc. was brought on board as a partner in their stead.

Byju’s bought Aakash for over $950 million last year. Aakash’s operating margin is 20%, and its annual revenue is predicted to triple in the fiscal year that ends in March 2023. Due to its good financials, Aakash distinguishes out among recent IPOs in India; in contrast, high-profile but failing digital enterprises Paytm, Zomato Ltd., and Policybazaar have suffered since their debuts.

According to one source, Byju’s has postponed negotiations about listing on its own stock exchange since the world economy is not promoting fresh technology discoveries. Although Byju’s had been in discussions with numerous special purpose acquisition firms for a listing, such plans have been halted due to the global economic slump and declining tech stocks.

Despite the fact that the higher-education platform Great Learning is far smaller in size, one source indicated that a successful Aakash sale may drive Byju’s to execute IPOs for other recent purchases as well.


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