The initial public offering (IPO) of BYJU-owned coaching network Aakash Educational Services appears to be moving forward. The edtech decacorn is reportedly planning to raise up to $250 million in convertible notes through its subsidiary before going public.
According to Bloomberg, Aakash will issue notes that convert into equity at a 20% discount to the offline coaching network’s listing price. Some of BYJU’s existing investors are also expected to participate in the round.
The edtech has been looking to raise funds to help it get through the cash crunch that has plagued it for the past year. According to people familiar with the development, the move to raise capital was necessitated after discussions with private equity (PE) firm TPG and two other Middle Eastern sovereign wealth funds to raise investments for Aakash fell through due to due diligence issues.
Last month, it was reported that BYJU’S was in talks with multiple investors to raise more than $500 million in funding at its last-known valuation of $22 billion in order to avoid potential debt issues. BYJU’S, the brainchild of Byju Raveendran and Divya Gokulnath, was founded in 2006 and has grown to become the country’s largest edtech platform, owing largely to pandemic-induced growth.
However, as schools and physical educational institutions reopened following the pandemic, BYJU’s growth slowed as students preferred in-person coaching centres over online models. As a result, BYJU’S purchased the 33-year-old Aakash in April 2021 in order to capitalise on the lucrative offline play.
While the transaction was marred by delays in payments, BYJU’s finally closed the transaction after paying venture capital (VC) firm Blackstone INR 1,983 Cr for its services. Later, it was revealed that the edtech decacorn was considering renegotiating the terms of its $1.2 billion term loan.
In October last year, the edtech decacorn picked up an unsecured loan of INR 300 Cr from Aakash for its ‘principal business activities’. BYJU’S has recently made headlines for all of the wrong reasons. Last year, the company laid off more than 4,000 employees across its various subsidiaries.
