(Bloomberg) — The online education provider Byju’s, India’s most valuable startup, is in advanced discussions to go public through a merger with one of Churchill Capital’s special-purpose acquisition companies, according to people familiar with the matter.
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The startup held talks with several potential SPAC partners and is farthest along in working out an agreement with Michael Klein’s Churchill Capital, said the people, asking not to be named discussing private matters. Churchill Capital VII raised more than $1.3 billion in an offering in February and trades on the New York Stock Exchange.
Under the preliminary terms discussed, Byju’s would raise a total of about $4 billion and seek a valuation of about $48 billion, the people said. The startup was valued at $21 billion, according to market research firm CB Insights.
While an announcement could come as soon as January, the negotiations are not final. Byju’s or Churchill could still opt out of such a deal, and Byju’s could consider an IPO in India next year, the people said.
The startup had earlier discussed a SPAC merger with Michael Dell’s MSD Acquisition Corp. and Altimeter Capital Management, one of the people said. India-headquartered companies can’t go public through conventional intitial public offerings in the U.S. under the country’s current regulations.
Byju’s declined to comment. Churchill didn’t immediately respond to requests for comment.
The Bangalore-headquartered company, founded and led by former teacher Byju Raveendran, provides K-12 lessons and video material to millions of Indians studying for the country’s competitive engineering and medical entrance exams. It also provides one-to-one coding, math and reading classes and material to students in countries in North America, the Middle East and Latin America.
Byju’s had been aiming to file preliminary documents for a traditional initial public offering as soon as the second quarter of 2022 and was also considering a SPAC merger, Bloomberg News reported in September. That had been an acceleration of earlier plans to go public in 12 to 24 months. The startup and its bankers had discussed a valuation of $40 billion to $50 billion, although the final determination would depend on financial results and investor demand, people familiar with the matter said at the time.
India’s technology sector has soared this year, with IPO fundraisings on track to reach record levels. Venture capital firms have also stepped up their investments in the country, driven in part by a Communist Party crackdown in China that has made that market less hospitable.
Digital payments pioneer Paytm went public in the largest IPO ever for the country, but its shares quickly tumbled. It’s not clear how that episode has affected investor appetite for large offerings.
Byju’s, formally called Think & Learn Pvt., has prominent global investors including Facebook founder Mark Zuckerberg’s Chan-Zuckerberg Initiative, Naspers Ltd., Tiger Global Management and private equity giant Silver Lake Management.
In a recent conversation with Bloomberg News, founder Raveendran said the startup is targeting 100 billion rupees ($1.3 billion) in revenue in the year ending March 2022, with a 20% margin. Byju’s has been on an acquisition binge in the past year, acquiring startups offering coding lessons, professional learning courses and test prep classes for competitive Indian exams.
(Updates with other SPAC bidders from fifth paragraph)
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