Edtech Eruditus gets $350 mn debt from CPPIB for M&As


Bengaluru: SoftBank-backed executive education-focussed startup Eruditus has closed a $350 million debt financing from Canada Pension Plan Investment Board (CPPIB) to largely fund its aggressive acquisition plans in its overseas markets, cofounder Ashwin Damera said.

The edtech company has been in talks for strategic acquisitions and plans to spend as much as $1 billion for the same, Damera told ET in an exclusive interaction. The debt capital will be used for two key acquisitions in Europe and the US, as the company plans to grow its gross annual bookings by 90% to around $950 million in fiscal 2023, as against an estimated $500 million in this fiscal year ending March 31.

About $200 million of gross bookings next financial year are expected through the inorganic route. Eruditus is said to be already in the final stages of closing a $250 million acquisition in Europe, of a company that largely offers online certificate courses to non-English speakers. Damera did not disclose the name of the company.

The debt from CPPIB, which is routed through subsidiary CPPIB Credit Investments Inc, is a five-year credit with a bullet payment of the amount at the end of the tenure, without having to pay any interest on it, Damera said. “We are projecting about $700-750 million in gross bookings for next financial year and inorganic bets will play an important role-in terms of contributions,” he added. The company had gross bookings of around $175 million in FY21.

The CPPIB investment marks a growing trend among some of the largest Indian startups which have opted for different kinds of debt financing. Other companies that have raised debt funding included Byju’s, Udaan and Oyo Hotels & Homes.

Last year in May, Eruditus made a $200 million acquisition of Silicon Valley-based Idtech to enter the K-12 Stem space, or school education in the science and mathematics stream. In August, it closed a $650 million funding round, which included a secondary share sale, led by SoftBank Vision Fund II and Accel US. It was valued at $3.2 billion after this funding, making its way to the unicorn club, or startups having a valuation of at least a billion dollars.

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According to Damera, the company will also look at raising equity capital after this debt financing in the second half of 2022, which could be anywhere between $200 million and $300 million. Further details are not finalised yet, he said.

“Our acquisition pipeline will enable us to accelerate growth, impact more learners, and improve our profitability,” Damera added.

The company is looking at a large deal in the US, a person aware of its plans said. “This would be its largest M&A so far.”

For Eruditus, about one-fifth of its gross annual bookings are from India while the rest is split across markets like the US, Latin America, Europe and others. In FY21, the company reached learners in around 80 countries and offered its programmes through partnerships with more than 50 universities globally.

“The investment is also aligned with our strategy of pursuing high quality credit investments across Asia Pacific and delivering attractive risk-adjusted returns for our contributors and beneficiaries,” said Raymond Chan, managing director and head of APAC credit at CPP Investments.

GSV Ventures, the Chan Zuckerberg Initiative, Leeds Illuminate and Prosus, as well as Sequoia Capital India and Bertelsmann and Chimera are among its existing investors.

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