Post a fund raise last month which valued it at $2.8bn , PhysicsWallah has now shortlisted 4 investment banks as advisors as the top ed-tech unicorn gears up for its listing plans in 2025, four persons in the know told Moneycontrol on the condition of anonymity.
"Following pitches for the IPO, which were held recently, PhysicsWallah has picked Axis Capital, Kotak Mahindra Capital, Goldman Sachs and JP Morgan," said one of the persons above.
A second person confirmed the above. It was unclear if more banks would be added at a later stage if required.
"No quantum has been finalised yet and the deal size may vary later, but the proposed issue may look to raise in the range of $400million to $500 million," the third person said.
Additionally, according to the fourth person, the deal is likely to be a combination of primary and secondary issue of shares, facilitating growth capital and exit windows if required for the multiple investors, depending on their respective lock in periods and investment strategies.
When it comes to valuation , PhysicsWallah will target a significant premium to the last round which valued it at $2.8 bn, the fourth person elaborated.
There is industry buzz of a targeted valuation of $4bn to $5bn, but this could not be independently verified. The firm's investors include Westbridge Capital, GSV Ventures, Lightspeed Venture Partners and Hornbill Capital.
Moneycontrol could not elicit an immediate response from PhysicsWallah and the banks. Email queries have been sent and this article will be updated as soon as we hear from them.
On September 21, Moneycontrol was the first to report that PhysicsWallah, keen to fast track the listing process, had invited at least 10 investment banks for IPO pitches.
If these plans fructify into an eventual listing, PhysicsWallah could potentially become India's first ed tech firm to debut on the domestic bourses, considering uncertainty around the earlier listing plans of troubled peer Byju's arm Akash Education Services.
To be sure, peers UpGrad and Vedantu have also spoken about their IPO plans in the past.
Unacademy, Unext Learning, Allen Career Institute , K12 Techno , Brightchamps and Simplilearn are some of the other firms operating in the segment.
On September 20, PhysicsWallah raised $210 million via a combination of primary and secondary transactions. The capital raise, led by Hornbill Capital, saw participation from Lightspeed Venture Partners, as well as existing investors WestBridge Capital and GSV Ventures.
Despite challenges in the Indian edtech sector, the valuation of $2.8 billion secured by PhysicsWallah was 2.5 times higher than the earlier valuation of $1.1 bn post its previous funding, reflecting investor confidence in the industry's potential. The firm had mopped up $102 million from WestBridge and GSV Ventures in its debut fund raise.
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'Test'ing the capital markets
Noida headquartered PhysicsWallah counts teacher-turned-entrepreneur Alakh Pandey and Prateek Maheshwari as co-founders. The firm has over 55 lakh paid students, 4.6 crore YouTube channel subscribers , 14,000 plus employees and covers atleast 105 cities with 2 lakh plus students in offline centres.
In an exclusive interview to Moneycontrol after sealing its last fund raise, the firm's founders said - "Honestly, we didn’t actively chase investors for this round; there was some inbound interest. We are sitting on a Rs 1,200-crore treasury, and for innovation or building from ground up, we need capital. There is no specific use for the fresh capital at the moment. We’re not targeting any particular acquisition right now. The company has grown significantly since our first fundraise, and a larger treasury gives us more comfort. We’ll determine the capital deployment with time"
They added, "FY25 is expected to be our highest absolute EBITDA year. While our online operations have been nearly 50 percent profitable from day one, our offline centres, which have required significant capital expenditure, will also start delivering results over time. For FY24, our revenue grew 2.5X."
The firm had projected a revenue of Rs 2,400 crore for FY24.
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