Edtech unicorn Eruditus Education Pvt Ltd on Tuesday said it has raised $350 million (about Rs 2,696 crore) in debt capital from Canada Pension Plan Investment Board’s (CPPIB) credit arm to invest in mergers and acquisitions (M&As) to expand its global footprint.
In January, Eruditus’ Co-Founder and Chief Executive Officer (CEO) Ashwin Damera told VCCircle that the company plans to invest about $1 billion for M&As in 2022.
“Our mandate is to deploy anywhere between $750 million and $1 billion in M&As over the next 12 months, and so we are looking at various opportunities in different spaces,” Damera said.
After the completion of the latest debt financing, Eruditus will have raised more than $1 billion in debt and equity. CPP Investments had also participated in Eruditus’ $650 million funding round in August 2021, which had pushed Eruditus to the coveted unicorn club, taking the company’s valuation to $3.2 billion.
Eruditus’ debt fundraise comes at a time when global financial markets are facing turbulence due to Russia’s invasion of Ukraine.
Valuations of technology companies, especially the new-age tech companies that got listed last year including Zomato, Nykaa’s parent FSN E-Commerce, Paytm’s parent One97 Communications, among others, have fallen to multi-month lows. Many new-age tech companies have also pushed back their listing plans to avoid public market volatility.
Moreover, public shareholders are raising questions about new-age companies’ paths to profitability, as most of these companies have never reported a profit at company level till date.
Damera, however, had told VCCirlce that Eruditus was “very close” to achieving profitability and that the company expects to be profitable in 2022-23 (FY23), despite its aggressive M&A plans.
Damera said that the company’s acquisition pipeline will enable it to accelerate growth, impact more learners, and improve its profitability.
However, Eruditus’s fundraise underpins the scope of the edtech industry that has grown exponentially over the last two years due to a surge in demand for remote learning amid pandemic-induced restrictions on movements of people and public gatherings.
Many edtech companies have thus raised funds aggressively over the last two years at high valuations. To be sure, India has minted six unicorns or startups with over $1 billion in the edtech space since 2021.
Moreover, in a bid to capitalize on this surge in demand for edtech solutions, many companies in the similar space have also taken the M&A route to expand their presence across verticals and also to expand to more geographies, either domestically or globally.
In December last year, VCCircle reported that the five edtech unicorns as of 2021--Byju's, owned and operated by Think and Learn Pvt Ltd, Unacademy, owned and operated by Sorting Hat Technologies Pvt Ltd, Vedantu Innovations Pvt Ltd, upGrad Education Pvt Ltd had invested about $3 billion in acquisitions in 2021 alone. The five companies had acquired about 21 smaller firms.
Eruditus claims to have grown 120% on year in 2021-22 (FY22) and the company expects to clock gross bookings of $500 million for the current year. It also claimed to have grown 2.5X organically.
The company further said that the pipeline of potential acquisitions is expected to contribute as much as 30% to the company’s top line and EBITDA (earnings before interest, tax, depreciation and amortization) in the next five years.
In FY21, alone, Eruditus said it provided its services in more than 80 countries and offered programs through partnerships with more than 50 top universities globally.
In 2021, the edtech unicorn had acquired Silicon Valley-based iD Tech, the world leader in youth STEM education (science, technology, engineering and mathematics), which marked its expansion into the K-12 (Kindergarten to class 12) space.
Eruditus also counts Accel, GSV, the Chan Zuckerberg Initiative, Leeds Illuminate, Prosus, Sequoia Capital India and Bertelsmann and Chimera as its backers.
