Technology in education, also known as “edtech,” has undergone significant change over the years, and India’s Byju’s has been at the forefront of this change. The edtech behemoth is looking into the possibility of selling a subsidiary called Great Learning, and its financiers have already taken action. For the purpose of protecting the “charged assets” of Great Learning and Byju’s Singapore corporation, they have chosen Kroll, a recognized risk consultancy company. In the event of a default, the lender may seize these charged assets, which are essential for securing loans. This article investigates the ramifications of this decision, looks at the companies involved, and speculates on how it might affect Byju’s and the edtech sector as a whole.
Credits: Money Control
The Players: Byju’s and Great Learning
Byju’s, often referred to as the “Amazon of Education,” is an edtech behemoth that has rapidly expanded its global footprint. The company’s offerings span a wide range of educational services, from interactive video lessons to live tutoring. Byju’s, founded by Byju Raveendran in 2011, has become a significant player in the education technology industry, valued at billions of dollars.
On the other hand, Great Learning is a subsidiary of Byju’s, specializing in career-focused online courses and programs. It has positioned itself as a leader in providing education for working professionals, and its CEO, Mohan Lakhamraju, has been an instrumental figure in its growth. Great Learning’s importance lies in its strategic positioning, offering courses that cater to the ever-evolving demands of the job market.
The Move to Safeguard Charged Assets
The appointment of Kroll to safeguard the charged assets of Great Learning and Byju’s Singapore entity comes at a critical juncture. The move has been initiated by secured creditors of Byju’s Alpha Inc., who are exercising their security rights due to defaults by the company. This decision underscores the lenders’ determination to protect their interests and recover the loans extended to Byju’s Alpha Inc.
One aspect that adds complexity to this development is the fact that Byju’s lenders hold a significant stake in Great Learning. This is a strategic move on their part, aimed at ensuring that they receive the right price for the subsidiary, particularly in the event of a management buyout. This information aligns with previous reports suggesting that Mohan Lakhamraju, the CEO of Great Learning, is considering a buyout of the company and may seek funds from private equity firms to facilitate this purchase.
Kroll’s Role in the Process
Kroll, a prominent risk advisory firm, has been entrusted with the responsibility of protecting and preserving the assets and businesses owned by Great Learning and Byju’s Singapore entity. Notably, this includes the subsidiary of Great Learning, Northwest Education Pte Ltd. Importantly, Kroll has clarified that the ongoing operations of Great Learning and Northwest Education will not be adversely affected by this appointment. All courses and programs offered by these businesses will continue without interruption.
Kroll is closely collaborating with the management of Great Learning and Northwest Education to ensure the uninterrupted continuation of their educational services. Furthermore, it has been emphasized that Mohan Lakhamraju will remain at the helm of Great Learning during this period. His continued leadership is aimed at maintaining the stability and quality of education that Great Learning provides.
Mohan Lakhamraju, the CEO of Great Learning, expressed his support for Kroll’s involvement and the preservation of their mission, stating, “I am happy to see the Kroll team’s commitment towards Great Learning’s high-quality education and continued growth and look forward to collaborating with them towards the realization of our mission of enabling career success through transformative learning.”
The Broader Context and Potential Impact
Kroll’s appointment as the charged assets’ guardian is in line with Byju’s broader initiatives to raise significant money. Byju’s has been looking into methods to sell off businesses, such as Great Learning and the book reading platform Epic, in order to raise between $800 million and $1 billion. A plan provided to the lenders in September states that these monies are intended to pay off the term loan B, with an upfront payment of $300 million by December.
It is crucial to note that Byju’s has been grappling with a liquidity crunch for a significant period. The company’s inability to secure a much-anticipated funding round has compounded its financial challenges. In response to these difficulties, Byju’s has undertaken cost-cutting measures, including laying off approximately 10,000 employees in the current year. Additionally, the company has divested office space in key locations such as Bengaluru and Delhi NCR.
