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Temasek, IFC buy out Upgrad Esops worth Rs 220 crore

Singaporean investment giant Temasek Holdings and the World Bank arm IFC have infused an additional Rs 220 crore or $29.5 million into leading online education platform Upgrad focused on up-skilling/reskilling professionals by buying out employees equity holdings through Esops. In the maiden external fund raising, Upgrad had in the last week of April got $120 million from the Singaporean investment giant Temasek Holdings and $40 million from the International Finance Corporation, wherein the promoters divested 25% of their equity.

Temasek and IFC infused an additional $29.5 million or Rs 220 crore into the company by buying out the Esops (employee stock option scheme) from around 600 employees, Upgrad co-founder and chairman Ronnie Screwvala told on Tuesday.

This works out to be around 5% additional equity dilution by the promoters to these investors.

The recent fund-raise from Temasek and IFC has triggered a small secondary deal for the early and long-term team members at the company. The founder group still owns over 70% in the company and has created a large Esop pool of close to 13% of the enlarged equity base, he explained.

The Esop scheme has benefited over 600 of employees.

The two quick rounds of equity infusion of $160 million had valued the the Mumbai-based startup, co-founded by ex-media baron Screwvala, Phalgun Kompalli, Mayank Kumar and Ravijot Chugh in 2015 by investing over Rs 170 crore, to over $850 million.

On the equity dilution through the two funding rounds, Screwvala had earlier told that the three promoters (excluding Ravijot Chugh) still retained almost 75%, of which he owned 60%, and the other two co-promoters would hold almost 15%.

But today, the refused to share how much each investor has picked and exactly how much their holding has gone up.

Upgrad had last week said the company would grow by acquisitions and had created a $250 million war chest for the same and the first two deals would be closed over the next two months.

After closing FY21 with a revenue run rate of over Rs 1,200 crore (up from Rs 230 crore in FY20), thanks to pandemic created work-from-home culture, the company has set a target of more than doubling the revenue run rate to Rs 2,400 crore this fiscal.

The higher topline numbers are because it could more than double the student base to over 1 million in the very first nine months of the pandemic which has boosted by the pandemic-induced work-from-home that has made professionals seek a lot of re-skilling and up-skilling to meet the changed demand from work.

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