According to the people cited above, the transaction, which closed on Friday, is a three-year loan facility with an equity upside linked to Aakash’s planned public listing in the near future.
The transaction, they said, was raised via a combination of non-convertible debentures (NCDs) and a smaller portion of compulsorily convertible debentures (CCDs). They’re linked to Aakash’s final valuation in the proposed initial public offer (IPO), that will roughly translate to a 12% annualised fixed coupon rate for the company.
“Apart from Davidson Kempner, Byju’s was also in talks with Apollo Global Management for the transaction and had also received a term sheet, but eventually decided to go ahead with the former’s offer,” said one of the persons cited above.
Byju’s didn’t respond to queries. Apollo Global and Davidson Kemper declined to comment.
Byju’s will be able to upstream the cash raised from Davidson Kempner to the holding company to meet its financing needs.
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This comes weeks after its office premises were searched by Directorate of Enforcement (ED) officials. India’s federal financial investigation agency has been looking into the edtech unicorn’s compliance with the Foreign Exchange Management Act (Fema) for 2011-23.Edtech stress & other woes
According to people aware of the matter, Byju’s is expected to use some of the new capital to refinance parts of its term loan B, which it raised in 2021.
ET has reported on Byju’s efforts to reach a deal with creditors, who asked for at least $200 million of prepayment on the $1.2-billion loan. Byju’s chief executive Byju Raveendran has also offered higher interest rate on the term loan B as the renegotiation is linked with delay in the company furnishing its financial results for FY21 and FY22.
Byju’s has been looking to stitch up new financing as the online education sector comes under pressure. Offline education centres have reopened and Covid-19 tailwinds have petered out. The company was last valued at $22 billion and remains the country’s most valued startup. It had last closed a $250-million funding round in October last year, at the same valuation.
However, Blackrock, one of its investors, recently marked down its holding in the edtech firm by 50%, pegging valuation at $11.5 billion. Top internet startups such as Swiggy, Pharmeasy and Pine Labs have also seen their valuation being lowered by funds managed by their investors.
The edtech firm reported losses of Rs 4,588 crore for FY21, up from Rs 262 crore a year ago. Readjusted revenue from operations stood at Rs 2,280 crore, down by a significant 48% from the projected revenue of about Rs 4,400 crore cited in the unaudited results of Think & Learn Pvt Ltd, the parent company. FY21 financials were filed after an 18-month delay due to issues related to revenue recognition.
Late last month, ED officials searched Byju’s premises, having issued several summons to cofounder Byju Raveendran previously. The company’s newly hired chief financial officer, Ajay Goel, was also questioned by ED, as reported by ET. Goel is learned to have told the agency that most decisions were taken by Raveendran.
ED is planning to write to lenders and banks as part of its investigation into Byju’s, seeking details of various transactions and loans, said people aware of the matter.
Byju's closes Rs 2,000 crore debt funding from Davidson Kempner - Economic Times
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