(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

MUMBAI (Reuters Breakingviews) - India’s most valuable startup is aiming for a textbook debut. Online educator Byju’s has an offer to go public in New York from one of the special-purpose acquisition companies sponsored by former banker Michael Klein, at a $48 billion valuation. The seller has long been the envy of its startup class but ensuring a successful start to public life will be a major test.

Named after co-founder and Chief Executive Byju Raveendran, the company is proof that the online subscription model can work. Byju’s launched its core app in 2015 and now boasts 115 million registered users and 7 million annual paid subscriptions. Users pay as much as $170 per year, twice the cost of a standard annual Netflix membership in the United States. Its success is built on the willingness of Indian parents to forgo luxuries in favour of spending on education.

Byju’s potential deal, first reported by Bloomberg, would add to its A-list investors - including BlackRock, Naspers and Tencent - through a chunky roughly $2.8 billion private placement. The SPAC entity’s sponsors would pump funds into that part of transaction too. Those moves would add credibility to any bullish sales forecasts.

It closely models the $40 billion deal that took Singapore-based Grab public in New York this month. Although constructed better than most SPAC deals, stock of the Southeast Asian ride-hailing, delivery and payments company has plunged by almost half since its shares started trading on Dec. 2 as the Chinese tech crackdown batters its peers from Uber Technologies to Didi Global, and Omicron roils markets.

That makes Byju’s valuation look especially punchy. The headline equity figure more than doubles the company’s worth in barely six months and amounts to 32 times expected sales this year, before accounting for cash. Still, Byju’s is set to eke out a profit despite spending some $2 billion on acquisitions in the first half, and other Indian startups like Falguni Nayar’s online beauty shop Nykaa, officially known as FSN E-Commerce Ventures, trade on similarly frothy multiples. Plus, it is coming to market as once hotly valued Chinese peers including TAL Education have been crushed by Beijing’s desire to reduce the financial burden on parents.

Byju’s may ultimately be better understood than a complex super-app like Grab, given 30% of the Indian company’s revenue comes from overseas, mostly from the United States, and that share is rising rapidly. Even so, aiming to be a class topper in this market is risky.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

- Online educator Byju’s has an offer from one of the special-purpose acquisition companies sponsored by former banker Michael Klein, valuing the Indian startup’s equity at $48 billion, according to a person familiar with the matter.

- Bloomberg reported the news first on Dec. 16. It said the companies were in advanced discussions for a deal, noting that the startup held talks with several potential SPAC partners and is farthest along in working out an agreement with one of Klein’s Churchill Capital Corp SPACs, citing sources.

- Byju’s may yet decide to go public in India, via a traditional initial public offering.

(Editing by George Hay and Karen Kwok) ((For previous columns by the author, Reuters customers can click on GALANI/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe | una.galani@thomsonreuters.com; Reuters Messaging: una.galani.thomsonreuters.com@reuters.net))