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Finlatics Project2

Warburg Pincus exited its investment in Indian edtech firm Byju's through an IPO in 2021. Warburg Pincus had invested $500 million in Byju's in 2018 at a $8 billion valuation. The IPO valued Byju's at $22 billion, providing Warburg Pincus a 2.75x return on its investment equivalent to a 117% compounded annual growth rate. While Warburg Pincus sold a portion of its stake, it retained a significant shareholding and remains committed to supporting Byju's continued growth in India's large market for education.

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32 views4 pages

Finlatics Project2

Warburg Pincus exited its investment in Indian edtech firm Byju's through an IPO in 2021. Warburg Pincus had invested $500 million in Byju's in 2018 at a $8 billion valuation. The IPO valued Byju's at $22 billion, providing Warburg Pincus a 2.75x return on its investment equivalent to a 117% compounded annual growth rate. While Warburg Pincus sold a portion of its stake, it retained a significant shareholding and remains committed to supporting Byju's continued growth in India's large market for education.

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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Project 4

Arihant Pradhan
NMIMS Mumbai
Contents
Project 4 .................................................................................................................................................. 1
Contents.................................................................................................................................................. 2
Case Study: Warburg Pincus Exits Indian Edtech Firm Byju's Through an IPO ..................................... 3
Positive Return Exit ............................................................................................................................. 3
Journey of the Company Leading to the Exit ...................................................................................... 3
Valuation and Rate of Return .............................................................................................................. 3
Continued Shareholding ............................................................................................................ 3
Lessons Learned .................................................................................................................................. 4
Additional Factors that Contributed to Byju's Success ....................................................................... 4
Conclusion ........................................................................................................................................... 4
Case Study: Warburg Pincus Exits Indian Edtech Firm Byju's Through
an IPO
Positive Return Exit
Journey of the Company Leading to the Exit
Byju's is an Indian edtech company that was founded in 2011 by Byju Raveendran and Divya Gokulnath.
The company offers a variety of educational products and services, including a personalized learning
app, live online classes, test preparation courses, and educational games. Byju's has grown rapidly in
recent years, and it is now the largest edtech company in India.

Byju's has benefited from a number of factors that have contributed to its success. First, India has a
large and growing population of school-age children. According to the World Bank, India has the
world's largest population of children and adolescents, with over 260 million children aged 0-19. This
represents a significant opportunity for edtech companies like Byju's.

Second, there is a growing demand for education in India. India's literacy rate has increased
significantly in recent decades, and there is now a growing middle class that is willing to spend money
on education for their children. This has driven the growth of the private education sector in India, and
Byju's has been a major beneficiary of this trend.

Third, Byju's offers a wide range of affordable and accessible educational products and services. The
company's personalized learning app is available in English and Hindi, and it is priced competitively.
Byju's also offers live online classes and test preparation courses at a variety of price points. This has
made Byju's products and services accessible to a wide range of students in India.

Warburg Pincus, a global private equity firm, invested $500 million in Byju's in 2018 at a valuation of
$8 billion. Byju's went public in November 2021 at a valuation of $22 billion. This gave Warburg Pincus
a 2.75x return on its investment.

Valuation and Rate of Return


Warburg Pincus invested $500 million in Byju's in 2018 at a valuation of $8 billion. The company went
public in November 2021 at a valuation of $22 billion. This gave Warburg Pincus a 2.75x return on its
investment.

To calculate the rate of return, we can use the following formula:

CAGR = [(Ending Value / Starting Value)^(1 / Number of Years)] - 1

CAGR = [(22 billion / 500 million)^(1 / 3)] - 1 = 117%

This means that Warburg Pincus generated a compounded annual growth rate of 117% on its
investment in Byju's.

Continued Shareholding
Warburg Pincus sold a portion of its stake in Byju's through the IPO, but it retained a significant stake
in the company. Warburg Pincus remains a major investor in Byju's, and it is committed to supporting
the company's continued growth. Warburg Pincus' exit from Byju's was a success story. The private
equity firm generated a 2.75x return on its investment, and it remains a major investor in the company.
Byju's is a leading edtech company with a large and growing market. The company is well-positioned
to continue its growth in the coming years.
Lessons Learned
The Warburg Pincus-Byju's case study provides a number of lessons for private equity investors. First,
it is important to invest in companies that are operating in large and growing markets. Second, it is
important to invest in companies that have strong management teams. Third, it is important to have a
long-term investment horizon.

Warburg Pincus' exit from Byju's shows that private equity can be a successful investment strategy.
However, it is important to remember that private equity is a risky asset class, and investors should
only invest what they can afford to lose.

Additional Factors that Contributed to Byju's Success


In addition to the factors mentioned above, a number of other factors contributed to Byju's success.
These factors include:

• Focus on innovation: Byju's has a strong focus on innovation. The company has developed a
number of innovative educational products and services, such as its personalized learning app
and its live online classes. Byju's is constantly innovating and improving its products and
services, which has helped it to maintain its competitive advantage.

• Customer focus: Byju's is highly customer-focused. The company collects feedback from its
customers on a regular basis and uses this feedback to improve its products and services.
Byju's also offers a variety of customer support options, such as live chat and phone support.
This customer focus has helped Byju's to build a loyal customer base.

• Strong execution team: Byju's has a strong execution team in place. The company's
management team has a proven track record of success in the education sector. Byju's also
has a team of experienced educators who help to develop and deliver the company's
educational products and services. This strong execution team has been instrumental in Byju's
success.

Conclusion
Byju's is a leading edtech company with a large and growing market. The company is well-positioned
to continue its growth in the coming years. Byju's success is due to a number of factors, including its
focus on innovation, its customer focus, and its strong execution team.

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