NEW DELHI : Edtech giant Byju’s on Monday said it plans to take its wholly owned test-prep unit, Aakash Educational Services Ltd, public by the middle of next year.
The announcement comes on a day the edtech giant is slated to pay the $40 million instalment of an unrated loan of $1.2 billion it took in November 2021, the largest unrated loan by a startup ever. If Byju’s fails to make the quarterly interest payment by the 5 June deadline, the loan, seen as the main cause of its financial woes, will be termed as default.
Byju’s, which counts Sequoia Capital, Lightspeed Venture Partners, Silver Lake, Canada Pension Plan Investment Board or CPPIB, Tencent Holdings, and Naspers among its marquee investors, said its board approved the plan for an initial public offering (IPO) of Aakash, which offers coaching for competitive exams at brick-and-mortar centres. The company plans to soon announce merchant bankers to handle the public issue.
Bloomberg reported citing people close to the matter that Byju’s plans to make the quarterly interest payment of about $40 million on Monday to meet the 5 June deadline. The situation is still fluid, and plans could change, the report said.
Byju’s acquired Aakash in April 2021 in a cash-and-stock deal worth approximately $1 billion—the largest acquisition in India’s edtech history.
Meanwhile, the company, founded by Byju Raveendran, continues to raise millions of dollars in debt and equity. The company had last raised $250 million in debt in May from US-based Davidson Kempner Capital Management. This is part of an ongoing round to raise as much as $1 billion in a mix of debt and equity.
According to data compiled by Bloomberg, the $1.2 billion loan hit an all-time low of 64.5 cents per dollar in September. It has since recovered to approximately 78 cents per dollar currently.
The upcoming IPO will provide a significant capital infusion to bolster Aakash’s infrastructure, broaden its reach, and extend high-quality test-prep education to more students across the nation, Byju’s said in a statement.
Aakash is on track to reach ₹4,000 crore in revenue with an Ebitda (earnings before interest, taxes, depreciation, and amortization) of ₹900 crore in FY24, Byju’s said.
Since its acquisition, Aakash has benefitted from multiple synergies with Byju’s that have accelerated its growth. It clocked a threefold increase in revenue in the last two years, Byju’s said, adding that the IPO will allow both companies to offer a wider range of products to students.
Aakash currently runs more than 325 centres and serves more than 400,000 students across the country. With over 35 years of legacy in test prep, the company is one of the most popular brands for JEE (Joint Entrance Examination) and NEET (National Eligibility cum Entrance Test) coaching.
Meanwhile, Byju’s has been witnessing a markdown of its valuations in a few of its investors’ books. For instance, BlackRock Inc., the world’s biggest asset manager, reduced the worth of its investment in Byju’s by 26% in the March quarter, compared to three months prior and by 62% from the same period a year ago. This implies that Byju’s estimated value was less than $8.4 billion as of March-end, a decline from approximately $11 billion in December and $22 billion in March 2022.
However, in what could be a silver lining for Byju’s, another investor has increased the value of its stake in the company. T. Rowe Price, a US asset management firm, has boosted the value of its stake in Byju’s by about 11.5% in the quarter ended 31 March 2023, compared to the previous three months. The firm had earlier lowered the value of its stake in Byju’s to roughly $10 billion. However, with this latest disclosure, it appears that T. Rowe Price now values Byju’s at around $11.5 billion.
Updated: 06 Jun 2023, 12:27 AM IST
Byju’s prepares to take test-prep unit Aakash public next year | Mint - Mint
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