Byju's creditors onboard Kroll to 'safeguard' Great Learning assets

Byju’s lenders have appointed risk and financial advisory firm Kroll to protect assets of both Great Learning Education Pte Ltd as well as the edtech firm’s Singapore entity Byju’s Pte Ltd.

Kroll on Wednesday said that Cosimo Borrelli and Jason Aleksander Kardachi were appointed to safeguard the charged assets of Great Learning and Byju’s Pte.

The appointment was made on behalf of the secured creditors of Byju’s Alpha Inc, as part of the secured lenders’ exercise of their security rights, following defaults by Byju’s Alpha Inc.

Charged assets are used as collateral to secure a loan, allowing the lender to seize them if the borrower defaults.

“A primary focus of the appointment is to protect and preserve the assets and businesses owned by Great Learning (including its subsidiary, Northwest Education Pte. Ltd), and Byju’s Pte,” said Kroll.

It added, “The operations of Great Learning and Northwest Education are not impacted by the appointment and all courses and programs offered by these businesses continue as usual.”

The development comes at a time when Byju’s has decided to put two of its key assets — Epic and Great Learning — on the block to generate $800 million-$1 billion in cash. This would have met the edtech firm’s various commitments, according to the sources.

It includes repaying the entire $1.2 billion term loan B (TLB) to the lenders within six months. In the case of selling Epic, there is a joint process run by Byju’s and the lenders, according to the sources. TLB is a term loan by institutional investors with the prime goal of maximising their long-term returns.

Besides a banker being appointed, the lenders are also getting regular updates about that process.

However, in the process of selling Great Learning, there are reports that the management, including founder Mohan Lakhamraju, wants to buy back the company.

“The lenders appointed Kroll to ensure there is transparency and best value is achieved in the sale. It is to also ensure that there is no ‘sweetheart deal’ between Byju’s and Lakhamraju to buy back the company,” said a person.

Great Learning is 60 per cent owned by Byju’s Singapore and the remaining 40 per cent by Byju’s parent company in India Think and Learn Private Ltd. 

The lenders want to safeguard assets as the Singapore shareholding has been pledged to them as collateral. And, they want to secure the best price for it, particularly if there's a management buyout, according to the sources.

The cash-strapped edtech company had proposed repaying $300 million of the $1.2 billion loan in the next three months, depending on whether the lenders accept Byju’s amendment proposal, said people familiar with the development.

In 2021, Byju’s was on an acquisition spree to grow rapidly in India and globally as the pandemic accelerated the adoption of online education.

In July 2021, Byju’s acquired US-based digital reading platform Epic for $500 million, in a bid to expand its US footprint. It got access to 2 million teachers and 50 million children in Epic’s global user base.

During the same month, the edtech firm bought Singapore-headquartered Great Learning, a global player in the professional and higher education segment. The transaction value was $600 million, comprising cash, stock, and earnout.

A Byju’s spokesperson on Wednesday said that the firm is working with its partners, including Great Learning’s management and TLB lenders, for a potential divestment at optimal value. “This will boost Great Learning’s future growth as an independent company,” said Byju’s spokesperson.