Indian education provider Byju's is in advanced discussions to divest its U.S.-based digital reading platform for children, Epic! Creations Inc., for an estimated $400 million to Joffre Capital Ltd.
This potential sale is a strategic move to alleviate Byju's financial pressures.
The funds raised from the sale of Epic! would be directed towards repaying a disputed $1.2 billion term loan that has been a source of conflict between Byju's and its creditors. The loan was obtained to support the company's global acquisition activities during the pandemic.
Additional interested parties, including Duolingo Inc., have also expressed their desire to acquire the platform. The negotiations have been conducted confidentially by unnamed sources.
The sale process for Epic is being managed by Moelis & Co., and a finalised agreement could be reached as early as this month, though no official decision has been made yet.
Byju's retains the option to maintain ownership of the assets for a longer duration.
Byju's, officially named Think & Learn Pvt, has been actively working to reduce costs and minimise losses following the decline in online learning demand post-pandemic.
The company, once India's most valuable tech startup, has recently been entangled in a legal dispute with its creditors. It is also facing increased regulatory scrutiny concerning its financial accounts. The latest financial results indicate only marginal narrowing of losses at the parent company, despite a surge in business during the pandemic.
Joffre Capital Ltd. was founded by individuals with notable backgrounds in technology, finance, and business.
One of its founding partners, James Lu, formerly held an executive position at Chinese search engine Baidu Inc. He was also part of the investor group that acquired the gay dating app Grindr from Chinese internet company Kunlun Tech Co. in 2020. The founding team further includes professionals with extensive experience at Amazon.com Inc., Warburg Pincus LLC, and Goldman Sachs Group Inc.