Edtech unicorn PhysicsWallah makes confidential filing of draft papers for Rs 4,600-crore IPO

Alakh Pandey-led edtech unicorn PhysicsWallah makes confidential filing of draft papers for Rs 4,600-crore IPO

Top edtech unicorn PhysicsWallah has filed draft papers through the confidential pre-filing route to raise Rs 4,600 crore via an initial public offer, multiple industry sources in the know told Moneycontrol.

PhysicsWallah is backed by the likes of Westbridge Capital, GSV Ventures, Lightspeed Venture Partners and Hornbill Capital. If the listing plans fructify, the firm could potentially become India's first edtech player to debut on the domestic bourses.

"The draft documents have been filed with Sebi post the nod from the company's board. The confidential pre-filing route is increasingly being used by issuers across sectors now," said one of the persons above.

A second person told Moneycontrol that the PhysicsWallah IPO will largely consist of a fresh issue of shares and will also include an offer for sale ( OFS) component for the selling investors.

A third person also confirmed the filing with the market regulator.

All the three persons cited above spoke on the condition of anonymity.

Moneycontrol has sent an email query and could not elicit an immediate comment from PhysicsWallah and will update this story as soon as it hears from the firm.

On October 28, 2024, Moneycontrol was the first to report that PhysicsWallah had picked Kotak Mahindra Capital, Axis Bank, JP Morgan and Goldman Sachs to launch a $400-500 million IPO in 2025.

In terms of valuation, PhysicsWallah will target a significant premium to the last round, which valued it at $2.8 billion, the report had added.

The move makes PhysicsWallah the seventh major Indian firm opting for the confidential pre-filing route after Tata Play, Oyo, Swiggy, Vishal Mega Mart, Credila Financial Services and Indira IVF.

Introduced by Sebi as an alternate for main board issuers in November 2022, pre-filing allows companies to keep sensitive business details or financial metrics and risks under wrap, especially from rivals. On the other hand, in the standard format, the DRHP (draft red herring prospectus) becomes a public document post filing.

This gives issuers the comfort of confidentiality till they arrive at a final decision on the listing, and if required, they can even pull out later depending on market conditions, without disclosing key information.

On September 21, Moneycontrol was also the first to report that PhysicsWallah had invited at least 10 investment banks for IPO pitches as it was keen to fast track the listing process.

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 billion 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.

There is uncertainty around the earlier listing plans of troubled peer Byju's arm Akash Education Services. To be sure, 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.

'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 at least 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.