Byju Raveendran, the founder and CEO of Byju’s, is reportedly in initial discussions with private equity (PE) firms, including Bain Capital and KKR, to explore the possibility of selling a controlling stake in Aakash Educational Services Ltd (AESL), a significant asset in Byju’s edtech portfolio, according to the Economic Times. Several PEs, such as Carlyle, are also open to supporting Aakash Chaudhry, the former CEO and a member of the family that established AESL, in repurchasing the company. Chaudhry and his family, along with PE firm Blackstone, sold AESL to Think and Learn Pvt Ltd (TLPL), the parent company of Byju’s, in April 2021 for $950 million in stock and cash. However, the sale has not been finalized, as reported by the financial daily.
Most of the funds approached are interested in transactions involving a change in management control, requiring at least 51 percent of the stake to be sold to them. Byju’s spokesperson stated that Think and Learn Pvt Ltd is not considering any sale of Aakash Educational Services Ltd, emphasizing its importance to their growth strategy.
The ongoing discussions are at an early stage and contingent on factors such as valuations, due diligence, shareholder approval, and the consent of hedge fund Davidson Kempner (DK), which is owed $96 million. These talks coincide with reports that Byju’s has approached Chaudhry for his potential return to the company in his former role, possibly replacing Abhishek Maheshwari, who left AESL last month. This potential arrangement is linked to finalizing the long-pending stock-swap agreement with Byju’s that was initially announced as part of the 2021 acquisition deal.
Raveendran is aiming for a valuation of Rs 7,000-8,000 crore for AESL, aligning with the acquisition price when AESL was purchased by TLPL.
Ranjan Pai, the chairman of the Manipal Group, is extending financial support to Raveendran to clear dues to lenders. Pai has provided around Rs 900 crore in loans and is expected to offer additional equity. Pai may invest $100 million in equity through secondary share purchases from Raveendran and provide a $170 million structured debt investment to assist Byju’s in settling dues to DK. These financial arrangements are expected to result in a significant dilution of Raveendran’s stake in AESL.
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According to sources, Raveendran and his team are dealing with various financial considerations and transactions, with a top priority being the settlement of DK’s dues. Pai’s involvement as an anchor investor has attracted PEs who see a potential buyout opportunity.
