Founders of online higher education platform Great Learning are in early discussions to buy back the company from troubled edtech major Byju’s, as per sources. Great Learning, under the leadership of Mohan Lakhamraju, the former India managing director of New York-based investment firm Tiger Global, is currently engaging with investors to secure funding for a potential deal.
“The discussions are at a very early stage. Great Learning is not Byju’s divestment priority. Byju's CEO Byju Raveendran and Great Learning founders share a good relationship and both the parties have agreed to consider a possible deal when it comes to that,” said a person familiar with the discussions.
Great Learning was among a series of acquisitions Byju’s made in 2021 when digital education grew exponentially due to Covid-related restrictions. During the hyper-growth years of 2020-2021, the Bengaluru-based company made acquisitions worth approximately $3 billion. Great Learning and Byju’s haven't responded to Business Today’s queries till the time of publishing this article.
Although the deal was initially estimated at $600 million, Byju's paid about $350 million, with the remaining amount contingent on achieving future milestones.
“A lot of the follow-on payments were to be milestone based. That has not happened because the deal happened in the boom years, and targets were very steep,” one of the sources said.
According to sources, Byju’s will first divest US-based Epic, the kids-focused digital reading platform it acquired in a $500 million cash and equity deal in July 2021. While the company has identified potential suitors for Epic, it is awaiting a response from the Term-Loan B (TLB) lenders on the repayment proposal it has put forth. The proceeds from a potential sale of EPIC will go towards repaying the first tranche of $300 million if the amendment proposal is accepted.
“Great Learning or any other asset sale will be to meet the second tranche of the TLB payment for which Byju’s has six months from the time an agreement is reached. Therefore, nothing has been agreed upon. Byju (Raveendran) likes the founders (of Great Learning). And therefore, he is even willing to accept a deal 10-15 per cent less than what an outsider would pay,” said one of the aforementioned sources.
It was reported in early September that Byju’s is engaging with potential buyers to sell Epic and Great Learning, two of its key assets, to meet the repayment obligations towards the $1.2 billion of TLB it availed from a consortium of US-based creditors. The company hopes to gain close to a billion dollars from these divestments.