BYJU’s-owned Aakash to go public next year 

Edtech company BYJU’s has formally announced plans to launch the initial public offering (IPO) of its subsidiary Aakash Education Services (AESL). The offline coaching chain that BYJU’s acquired in April 2021 in a deal worth $950 million will go public by the middle of next year. 

“The IPO will mark a milestone in the continued growth and expansion of Aakash [and] BYJU’s, creating a comprehensive portfolio of products that caters to a broader range of students,” the Bengaluru-based company said.

As per the company, the board has granted official sanction for the IPO and will soon announce merchant bankers for the listing. “The upcoming IPO will provide significant capital infusion to bolster Aakash’s infrastructure, broaden its reach, and extend high-quality test-prep education to more students across the nation,” it added. 

This comes in less than a month after BYJU’s raised $250 million from US investment firm Davidson Kempner Capital Management as part of its ongoing $1-billion funding round. While the company has managed to maintain its valuation of $22 billion, the funding round was a heavily structured one, tied down to the public listing of Aakash. The fund infusion offered the Bengaluru-based company some relief after an extended period of financial stress and regulatory headwinds.

Since the acquisition, Aakash has clocked a three-fold increase in revenue, which is on track to reach Rs 4,000 crore with an EBITDA of Rs 900 crore in financial year 2023-24 (FY24), the company said. 

Aakash is India’s largest test preparation company for engineering and medical entrance exams, with over 325 centres currently serving more than 400,000 students.  

The big-ticket acquisition was marred by payment delays to private equity firm Blackstone, Aakash’s biggest stakeholder, which owned nearly 38 per cent in the company before the acquisition. The company was supposed to clear the pending amount by June 2022, which was then deferred to September 23, 2022. BYJU’s paid the final tranche of Rs 1,983 crore last September. 

The announcement comes amid media reports that the firm is set to make a $40 million payment on Monday, which is part of its $1.2 billion unrated loan. This payment coincides with the deadline for the quarterly interest payment, which falls on June 5. 

The valuation of BYJU’s was slashed by 62 per cent by US-based investment management firm BlackRock, which owns less than 1 per cent equity in the edtech start-up. This comes after BlackRock cut the fair value of BYJU'S from October 2022. In its AMC filing with the Securities and Exchanges Commission, BlackRock has fixed the value of the company’s shares at $4,043,471, estimating BYJU’s fair value at $8.4 billion as of March 31, 2023.

Also Read: BYJU'S test preparatory arm, Aakash Education, to launch IPO next year