Indian EdTech Billionaire’s Firm Byju’s Combats Speculation About Its Finances, Eyes $2 Billion Acquisition

Asia Indian EdTech Billionaire’s Firm Byju’s Combats Speculation About Its Finances, Eyes $2 Billion Acquisition Anu Raghunathan Contributor Opinions expressed by Forbes Contributors are their own. I write about Indian entrepreneurs. New! Follow this author to improve your content experience.

Got it! Jul 7, 2022, 12:25am EDT | Share to Facebook Share to Twitter Share to Linkedin Byju Raveendran speaks during the Credit Suisse Asian Investment Conference in Hong Kong, China, on . . .

[+] Tuesday, March 26, 2019. Paul Yeung/Bloomberg There’s been a lot brewing lately at Bangalore edtech giant Byju’s , which is backed by investors such as Tencent and Facebook’s Mark Zuckerberg and was last valued in March at $22 billion. It has been facing a raft of allegations in various news publications pertaining to its finances.

Notably, that money from the last funding round has yet to be received; that Byju’s has delayed payment for a big-ticket acquisition it made last year; and that its financial results for the fiscal year March 2021 have yet to be signed off by the company’s auditors. Byju’s has denied all these allegations. There are also reports of mass layoffs suggesting that nearly 2,500 people were laid off across its group companies.

Byju’s confirmed only 500 layoffs noting that it was 1% of the company’s 50,000-strong employee base . Unfazed, the company’s billionaire founder Byju Raveendran is pressing ahead with global expansion, eyeing its biggest acquisition to date. Byju’s has reportedly made a bid to acquire Nasdaq-listed 2U, valuing the firm at roughly $2 billion, more than twice its current market of $944 million.

Maryland-based 2U reported revenue of $946 million and a net loss of $195 million for 2021. It has projected revenue of $1. 1 billion with a net loss of between $240 million and $260 million for 2022.

2U offers more than 4,000 online courses spanning everything from professional enhancement courses to online degrees. It has nearly 44 million students, in partnership with more than 230 colleges, universities, and companies such as the London School of Economics and Political Science, Syracuse University and UC Davis. Last November, 2U completed its $800 million acquisition of edX, an open online course provider founded by Harvard University and the Massachusetts Institute of Technology.

Sources say that Byju’s has secured financing commitments of $2. 4 billion from a U. S.

bank to close the deal. Byju’s parent Think & Learn has been on a takeover spree in the past 18 months, spending nearly $2. 6 billion to acquire a slew of companies across the globe.

These include Indian test prep outfit Aakash Educational Services in April 2021; Singapore upskilling firm Great Learning in July 2021 and Austrian Math-learning app GeoGebra in December. MORE FOR YOU China Detains Fallen HNA Ex-Billionaire Chairman Ahead Of Airline Restructuring Vote Nasdaq Listing Of Freshworks Creates Windfall For Indian Founder And Hundreds Of Employees Ninja Van Becomes Singapore’s Newest Unicorn After Raising $578 Million From Alibaba, B Capital At the height of the Covid-19 pandemic, Byju’s and others in the edtech sector added millions of students, who wanted to study online or improve their professional prospects. But with the pandemic abating and schools reopening, edtech outfits are scrambling to reset to a hybrid model that will accommodate both online and offline learning.

As the industry recalibrates, layoffs have become a reality facing not just Byju’s but its domestic rivals such as Meesho and Unacademy. At Byju’s, news reports suggested that nearly 2,500 people have been laid off at coding subsidiary White Hat Jr and test prep company Toppr. A Byju’s spokesperson however clarified that only 500 employees from a total roster of 50,000 were laid off across all group companies.

“To recalibrate our business priorities and accelerate our long-term growth, we are optimizing our teams across our group companies,” said the Byju’s spokesperson. “Byju’s continues to hire across levels for various businesses, departments and functions. ” Industry analysts say that this time of reckoning was expected and echoes what’s happening in certain other industries.

“Business models that saw huge tailwinds due to the pandemic, including edtech, telemedicine and products for Covid, have seen a steep drop in revenue,” said K. Ganesh, who’s backed a slew of startups across retail, home healthcare, home interiors and jewelry. “It’s a ‘return to reality’ sequence after a brief cocoon of tech comfort created by Covid-19,” says Ganesh Natarajan, chairman of digital consulting and investment company 5F World.

“Only those edtech companies, which demonstrate real value in a hybrid learning environment, will succeed. ” As a market leader, Byju’s was quick to pivot to the hybrid model. In February it opened Byju’s Tuition Centres combining in-classroom learning and online tuition.

It has 100 such centers already and wants to enroll a million students from grades 4-10, employing 10,000 teachers. Meanwhile, a recent report alleged that the March $800 million funding round led by Los Angeles-based Sumeru Ventures is “fake” and the money has not come in. A Byju’s spokesperson denied the allegation and clarified that the “fundraising efforts are on track and the majority of the $800 million has been already received.

The balance is also expected soon. ”Raveendran himself has invested $400 million in this round. News reports in the past week also suggested that Byju’s has delayed payments for its $900 million acquisition of test-prep firm Aakash Educational Services.

But a Byju’s spokesperson disputed the claim and clarified that the payment was completed this week and it was within the agreed timeframe. Another matter of concern that was recently flagged is that Byju’s has not yet released its financial results for the previous fiscal year ended March 31, 2021. This led to speculation about purported differences between the company and its auditor, Deloitte Haskins & Sells.

“We strongly deny the allegations about Deloitte not signing our results,” a company spokesperson said. “Our FY21(fiscal 2021) results will be out by July 15. ” Byju’s parent Think & Learn reported consolidated revenue of 24 billion rupees ($325 million) for the fiscal year ended March 2020, an 82% increase over the previous year.

But it had posted a widening net loss of 2. 6 billion rupees. Analysts say that the company is still on track to report revenue of nearly 100 billion rupees for the fiscal year ended March 31, 2022.

Raveendran, who launched Think & Learn with his wife Divya Gokulnath in 2011, shares a $3. 5 billion fortune with her. She was part of Forbes’ “Asia’s Power Businesswomen” list in 2020.

Divya Gokulnath, cofounder of Byju’s, speaks at the RISE 2019 conference in Hong Kong. Stephen McCarthy/Sportsfile via Getty Images Follow me on Twitter . Anu Raghunathan Editorial Standards Print Reprints & Permissions.