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Qatar Investment Authority QIA, which was in advanced talks to invest between $25 billion and $350 million in the education technology company, has pulled out of talks, people familiar with the matter said. It had been planning to invest at a 40-50% discount to the $22 billion the company received in its last round.
Byju’s has not yet filed financial results for the months ended March 2021 and March 2022. The company has informed lenders and debt investors that it may complete its FY21 audited financial results approved by its official auditor Deloitte by Sept. 6. Any investment pundits say this could be on the radar until the company announces its financial results.
Sources close to the company say potential investors in Byju have two options — either as an equity investor at a $22 billion valuation, or a convertible at a 20% discount to the IPO valuation range IPO vehicle. The cap is $22 billion and the cap is $35 billion. If the IPO timeline is delayed, the valuation discount will increase every six months.
Abu Dhabi-based ADQ has been an investor in the company since last year. ET reported on June 12 last year that ADQ was among the investors in the company’s $350 million financing, which valued the company at $16.5 billion, making it the world’s most valuable edtech company.
Byju’s may seek to form a consortium of investors.
“Byju is in talks with royals United Arab Emirates,” said one of the above-mentioned people. “They are passionate about India and the edtech story. ADQ is also an existing investor, so it’s reassuring. It is unclear which Abu Dhabi investment vehicle will enter. This round of financing is likely to be led by International Holding Company (IHC).
CEO of Byju Byju Raveendran declined to comment on speculation.
Syed Basar Shueb, chief executive and managing director of IHC, did not respond to inquiries. IHC is an investment vehicle and conglomerate chaired by Sheikh Tahnoon bin Zayed al-Nahyan, UAE National Security Advisor and one of the country’s most influential figures.
Qatar’s sovereign wealth fund QIA led a $150 million funding round with Owl Ventures in 2019, when it invested $50 million. Earlier this year, QIA and Byju’s launched a new education technology business and state-of-the-art research and development centre in Doha. The new entity will drive research and innovation to create bespoke learning solutions for students in the Middle East and North Africa (MENA) region. The company has also reportedly spent $40 million to become the official sponsor of the soccer World Cup in Qatar later this year.
“In the past, the company has also made such statements (about announcing results) and given deadlines, but failed to comply. We will wait and see before commenting,” said an industry executive who asked not to be named . “This is a key reason why QIA’s investment committee opted out even after being an existing investor and having had weeks of conversations.”
QIA is divided over the investment, with some preferring to wait until the audit figures come in, people familiar with the matter said. These individuals insist on independent third-party due diligence and forensic work to check the books. It’s something Byju has been resisting, they say.
QIA declined to comment.
Sources close to the company said Byju’s will use the funds raised for growth and acquisitions. The company needs to pay Blackstone $200 million for its $1 billion acquisition of Aakash Educational Services last April.
To date, the company has raised nearly $6 billion from more than 70 investors, including General Atlantic, Sequoia Capital, Sofina and CPPIB, Bond Capital, Silver Lake Management, Naspers Ltd and Tiger Global. It has been trying to close an $800 million funding round, but a global technology rout has weighed on valuations, coupled with audit delays. It has been one of the most aggressive online education companies, with multiple acquisitions around the world.
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