Byju's in Talks With PE Funds Over Aakash Stake Sale: Report
Byju Raveendran, founder and CEO of cash-strapped edtech firm Byju”s, is poised to sell shares in Aakash Educational Services Ltd (AESL), a subsidiary of Byju”s. Raveendran and his advisors have held exploratory talks with private equity (PE) firms Bain Capital and KKR, among others, regarding the sale.
Discussions are in early stages and are subject to valuations, diligence, and the permission of shareholders as well as hedge fund Davidson Kempner (DK), which is owed $96 million.
However, Byju”s parent company, Think and Learn Pvt Ltd (TLPL), has denied the report, saying they are not planning to sell AESL as it is a crucial part of their growth strategy. TLPL bought AESL from its founder and then CEO Aakash Chaudhary in April 2021 for $950 million in stock and cash.
The settlement has not been finalized as of yet. The report said that some PEs have teamed up with Chaudhary to reacquire AESL as these funds have had prior connections with Chaudhary. According to the report, most funds that have approached Byju”s have demanded a 51% stake in AESL, which would give them control of the company.
Bain, KKR, and Carlyle have not responded to queries regarding this matter, while Chaudhary was not available to comment.
Earlier, Byju”s had reportedly urged Chaudhary to return to the company to replace Abhishek Maheshwari, who left the company in October. This would enable the company to close the long-pending stock-swap deal with Chaudhary made as part of the 2021 agreement.
Meanwhile, Manipal Group chairman Ranjan Pai has stepped in as a savior, offering a Rs. 900 crore loan to the Byju”s founder to help him close his dues to lenders. Pai is seen as a white knight who will provide liquidity to the Byju”s founder and help him clear his dues to lenders. Pai is planning to invest $100 million via secondary share purchases from TLPL founder.
He has also announced a $170 million structured debt investment to help Byju”s clear its loan with Davidson Kempner. With the deal, Byju Raveendran”s stake in AESL will be diluted.
According to the Economic Times, TLPL owns 43% of AESL, and Raveendran holds 27% in his personal capacity, making up a block of 70%. The Chaudhry family owns 18%, while Blackstone holds 12% in the three-decade-old test prep company. Under the swap agreement, the Chaudhrys will receive shares in TLPL. Blackstone may also want to cash out of its five-year-old investment, although the firm”s position is not yet clear.
Raveendran is reportedly expecting a valuation of Rs. 7,000-8,000 crore for AESL, similar to the acquisition price. The funds are unwilling to commit to any investment without independent due diligence, particularly since the latest audited accounts of TLPL are for FY21.
