Indian multinational educational technology company, Byju's has reportedly raised $1.2 billion through a term loan from the foreign market. According to credible sources, the firm – esteemed at $18 billion – had earlier planned to raise $700 million, but the round was later upsized.
Speculation are made that Byju’s has taken benefit of interest rate arbitrage accessible in worldwide markets, which has resulted in record-low rates for loan. The firm has raised funding at Libor + 550 basis points, a far lower rate than what is available in local markets.
Libor (London Interbank Offered Rate), is the standard at which overseas interest rates are set, and borrowings take place. Generally, the six-month Libor is considered for such loans, and recently, the rate was 0.22%.
Kamal Yadav, Managing Director at Morgan Stanley India, said that notably, from India and Asia, this is a major unrated Term loan B (TLB) and one of the largest unrated TLBs worldwide. It demonstrates the story of how strongly a company is growing as one of the largest and fastest ed-tech platforms.
TLB is also denoted as an institutional term loan. On the Workfront, Byju collaborates with US investment banks Morgan Stanley, JPMorgan, and Morgan Stanley to structure the loan.
The revenues will be used by Byju to fund general corporate objectives overseas, such as supporting business expansion in North America and funding future inorganic growth possibilities.
The ed-tech major has undergone multiple acquisitions across the global markets to fuel its growth ambitions.
Over the last six months, Byju's has spent more than $2 billion on acquisitions, causing consolidation in a sector that has benefited from the pandemic.
Byju's paid $500 million in cash and equity to purchase Epic, a US-based kids learning platform, in July. It also paid $600 million in cash and equity for the professional and higher education platform, Great Learning.