Indian online education start-up Byju’s in talks for record Spac deal

Indian online education start-up Byju’s in talks for record Spac deal

Byju’s, the Indian educational technology start-up, is in talks to go public in the US by combining with a blank cheque company led by Michael Klein’s Churchill Capital, in a deal that would value the business at more than $40bn.

Two people directly informed on the talks said discussions were at an early stage and come as Byju’s had been evaluating other mergers with US-listed special purpose acquisitions companies and as it considers an initial public offering in India.

One of the people said Klein’s Churchill Capital Corp VII Spac has offered to combine with Byju’s at a valuation of about $48bn and to raise about $4bn in new funds. However, another person said that the approach values Byju’s at roughly $40bn and would allow it to raise about $2bn in new funds.

Any deal at these levels would make it the biggest-ever combination of a privately held company with a Spac, beating the close to $40bn valuation reached by Singapore’s Grab through its merger earlier this year with Altimeter, a Spac launched by the eponymous US hedge fund.

Churchill VII is the largest Spac run by Klein, a former Citigroup executive and prolific Spac sponsor, and has a $1.3bn cash pile which it raised in February.

MSD Acquisition Corp, a blank cheque vehicle formed by the investment group that manages Michael Dell’s assets, and Altimeter have also been in talks with Byju’s, one of the people added. The sharp fall in Grab’s shares after its deal with Altimeter does not appear to have dented enthusiasm for a combination with Byju’s, which was valued at $21bn in its most recent public round. Byju’s declined to comment.

Founded in 2011, Byju’s has raised billions of dollars from investors including Tiger Global, Sequoia and Naspers.

It has enjoyed rapid growth from its learning apps for children, riding a surge in demand as prolonged school closures in India as a result of the Covid-19 pandemic forced parents to pay for additional online education programmes.

Byju’s has 7m paid users and more than 100m registered students. India has the world’s largest number of school age population at about 300m children.

A wave of other Indian tech companies have recently gone public, including fintech group Paytm and food delivery app Zomato. Hotel company Oyo has filed for its IPO.

Churchill, which also declined to comment, has achieved mixed success with its blank cheque deals.

Its merger with data analytics company Clarivate has performed well but Churchill’s deal with healthcare provider Multiplan has faced problems.

The deal between Churchill Capital Corp IV and electric vehicle group Lucid Motors, which is controlled by Saudi Arabia has also been rocky. Lucid’s shares have surged more than 300 per cent since the combination but US securities regulators are probing forecasts the carmaker presented when it went public.

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