PhysicsWallah, an edtech unicorn, has gained significant investment by a global firm, Think Investments, in a critical pre-IPO deal. The investment of slightly above ₹136 crore occurs when the company is making preparations for its much-awaited initial public offering (IPO) to be launched next week. This new capital inflow underscores the persistence of investor confidence in the valuation of the edtech business and its potential to grow further in the near future as the company embarks on its public offering.

Pre-IPO funding and investment

It was funded not by direct primary capital investment in PhysicsWallah but by a share purchase arrangement in which Think Investments purchased a minority interest in PhysicsWallah directly from existing employees.

Think India Opportunities Master Fund LP purchased 1.07 crore shares of equity of 14 shareholders of the edtech company as a part of the transaction. This equates to a purchase of 0.37% share of PhysicsWallah. The shares were bought for ₹127, a price that is 17% higher than the highest frequency of the forthcoming IPO issue price band of the company. The total value of this transaction was ₹136.17 crore.

This pre-IPO round is being led by the investment firm, Think Investments, which is a large participant in the international investment world and has an asset base of $4 billion. The investment policy of the firm targets supporting early-stage technology-based businesses.

Think Investments has established a large and diverse portfolio in India. It has invested in several popular companies operating in different industries, including Swiggy, FirstCry, Urban Company, PharmEasy, Experian, Spinny, NSE, Star Health, Meesho, Rapido, Chaayos, and Dream11. Such a strong track record proves that it is knowledgeable in finding and investing in Indian technology ventures that have high growth potential.

Aim to raise funds

The edtech unicorn is also preparing to make its IPO, which will open on November 11. The company targets to raise ₹3,480 crore with the help of the offering. The company has priced the IPO between ₹103 and ₹109. On the high end of this price range, the company is aiming at a valuation of above ₹31,500 crores. This IPO structure consists of two primary elements. A fresh issue of ₹3,100 crore. Offer-for-sale (OFS) of ₹380 crore by the co-founders and promoters, Alakh Pandey and Prateek Boob.

A significant share of 80.62% of the company is owned by the promoters. This will be 72% of the shares after IPO. The problem will be closed on November 13, and the allocation of anchor investors will be held on November 10. The major funds raised through the fresh issue aspect of the IPO are to be utilized to finance the growth and other development programs at the company.

Conclusion

Physics Wallah has been able to secure a major pre-IPO investment of more than ₹136 crore by Think Investments, a few days before its launch in the market. This is a strategic buyout whereby the international company bought shares of employees at a premium valuation, and this is an indicator of great institutional confidence in the estimation by the company of more than ₹31,500 crore. With the edtech unicorn set to IPO its ₹3,480 crore on November 11, the funds being raised, combined with the partial sale of stake by the co-founders, as well as the intention of the early investors to hold on to their shares, put PhysicsWallah in a position to aggressively pursue its planned expansion and growth programs after the IPO.