The most valuable ed-tech firm in the world, Byju’s, wants to raise up to $250 million by selling convertible notes through Aakash Educational Services, which provides tutoring services.
They said, requesting anonymity since the information is private, that Aakash Educational Services will issue the notes that will convert into equity at a 20% discount to the listing price of the unit’s anticipated initial public offering.
Without going into further detail due to the delicacy of the subject, they stated that certain Byju’s investors are anticipated to join in the round.
The pre-IPO financing at Aakash will aid the firm in surviving a cash shortage since discussions to raise money at the parent level are being held up by a protracted due diligence procedure. In order to choose arrangers for Aakash’s IPO, the Bengaluru-based startup began discussions with bankers late last year, according to Bloomberg News.
Byju’s declined to respond through a spokesman.
In 2021, Byju’s paid around $950 million to acquire the three-decade-old Aakash. It runs physical centres where young people may receive assistance in preparing for the difficult tests that decide their standing for admission to prominent colleges and institutes like the Indian Institute of Technology.
According to the company, negotiations for a capital increase at the parent level with the private equity firm TPG and two Middle Eastern sovereign wealth funds collapsed during due diligence, which sparked discussions to raise money for Aakash.
Byju’s is also in separate discussions with creditors to rework a contract regulating a $1.2-billion loan that is in violation of covenants. Byju’s, which struggled with rising losses after the pandemic-era surge in online tutoring petered out, is dealing with mounting losses.
Byju Raveendran, the organization’s founder and a former teacher who is also the son of educators, is currently working on a turnaround strategy for the company with the goal of turning a profit this year.