According to persons familiar with the situation, Byju’s, the world’s most valuable edtech firm, is looking to raise up to $250 million via the sale of convertible notes through its tutoring service business.
The company’s tutoring service, Aakash Educational Services, would issue the notes that will turn into equity at a 20% discount to the price of the unit’s planned initial public offering, said the people, who did not want to be named because the information is not public.Several of Byju’s investors are anticipated to join in the round, they claimed, without providing any specifics due to the delicacy of the situation.
The pre-IPO financing at Aakash will help the firm weather a liquidity crisis while efforts to seek money at the parent level are delayed owing to a lengthy due diligence procedure. According to Bloomberg News, the Bengaluru-based firm began discussions with bankers late last year to choose arrangers for Aakash’s IPO.
A spokesman at Byju’s refused to comment.
Byju’s bought Aakash, which has been around for 30 years, for about $950 million in 2021. Aakash runs physical facilities to help students prepare for the difficult tests that rank them for admission to top colleges like the Indian Institute of Technology.Talks to raise cash in Aakash began when discussions with private equity firm TPG and two Middle Eastern sovereign wealth funds for a capital increase at the parent level halted during due diligence, they claimed.
Meanwhile, Byju is in separate negotiations with creditors to rework an arrangement regulating a $1.2 billion loan that is in violation of covenants. Byju Raveendran, the group’s founder and a former schoolteacher, is currently working on a turnaround strategy for the organization, aiming to make it profitable this year.
