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Why is Byju’s selling its receivables? And what are they?
For the past two years, Byju’s has been offloading chunks of its receivables. These transactions, which have gone unnoticed, raise several questions.
10 May, 2022•14 min
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10 May, 2022•14 min
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Editor's note: There is something unusual happening at Byju’s, India’s largest education technology company, which was last valued at upwards of $20 billion and counts Sequoia, SilverLake, Blackrock, General Atlantic, Tiger Global and the Chan-Zuckerberg Initiative as investors. According to documents accessed by The Morning Context, Byju’s—incorporated as Think & Learn Pvt. Ltd—has been offloading significant chunks of its trade receivables through pass through certificates, or PTCs. A total of eight tranches of PTCs have been sold by the company since 2019. A PTC is a financial instrument, specifically a securitization transaction where an issuer pools illiquid financial assets (like trade receivables) into marketable securities that can be sold to investors. An issuing company, usually a non-banking financial company, issues PTCs which are in the nature of participation certificates that enable investors to take a direct exposure on the performance of the securitized assets. What does that mean? An NBFC could do a securitization transaction where it takes, say, 10,000 loans worth Rs 10 lakh each; it then packages that and sells it to investors. The lender generates immediate cash flows while …
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