Byju's to settle a $1.2 billion loan as it looks to sell Epic: Report

Bengaluru-based Byju's, an edtech giant grappling with financial struggles, is reportedly looking to sell Epic, its US-based subsidiary that operates a kids' learning platform, to settle a $1.2 billion term loan B.

According to a PTI report, the edtech giant intends to complete the sale of the US-based kids' learning platform within 150 days or around six months.

How much Byju's spent to acquire Epic?

In 2021, the Indian startup ecosystem experienced peak funding growth, a time when Byju's also began its international expansion. In July 2021, Byju's acquired Epic in a deal consisting of cash and stock, valued at $500 million, to expand its presence in the US market.

Epic! was founded in 2013 by Suren Markosian and Kevin Donahue, Epic runs a namesake digital reading platform designed for children 12 years old or younger. At the time of acquisition, the US-based company had reached 90% of elementary schools in the U.S., engaging over 2 million teachers and 50 million children.

It’s worth noting that the acquisition of Epic allowed Byju's to leverage the latter’s extensive regional distribution network. During the acquisition, the edtech giant, Byju's, disclosed its plans to invest $1 billion in its North American business.

Byju's announces massive business restructuring  

This development comes a week after a spokesperson for Byju's confirmed media reports, stating that Arjun Mohan, the recently appointed CEO of Byju's India, has decided to initiate a business restructuring, a practice which could potentially result in the loss of 4,000-5,000 jobs, indicating that a massive round of layoffs may be imminent.

However, the edtech giant refrained from commenting on speculations regarding the layoffs. The company added that the decision is intended to streamline operations and eliminate redundancy by resolving the duplication of roles across various departments of the organization

But why Byju's is selling Epic?

The sale of Epic is not recent news. Previously, the Economic Times revealed that Byju's is exploring the sale of Great Learning with the aim to collectively raise $800 million, a substantial amount towards settling the outstanding $1.2 billion. 

Looking at the current situation, We can anticipate that every restructuring move the Byju's makes, from layoffs to asset sales, is a strategic step towards resolving the $1.2 billion Term Loan B and achieving profitability.

Why Byju's raised $1.2 billion?

In 2021, Byju's secured $1.2 billion through a Term Loan B facility from a consortium of international investors, aiming to bolster its presence in global markets. However, as the Indian startup ecosystem entered a funding winter, sustaining growth became challenging for loss-incurring companies like Byju's, which had previously thrived during peak funding periods.

Recently, the edtech giant reportedly made a proposal to lenders and offered to pay back its entire $1.2 billion term loan in less than six months. 

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