Byju’s looking to raise $250 million in pre-IPO funding for Aakash: Report
- ByStartupStory | March 9, 2023
According to sources familiar with the matter, Byju’s, the leading edtech company, is reportedly planning to raise up to $250 million by issuing convertible notes through its tutoring service branch, Aakash Educational Services.
As per the report, Aakash Educational Services will release convertible notes that will be transformed into equity at a 20% discount from the unit’s anticipated IPO listing price.
This move is expected to assist Byju’s, which is currently facing a liquidity crisis due to the extended due diligence process causing a delay in its fundraising efforts.
According to reports, Byju’s, headquartered in Bengaluru, initiated discussions with bankers towards the end of last year to choose underwriters for Aakash’s IPO.
In the previous month, Byju’s terminated the contracts of over 1,000 workers, with 15% of them holding engineering positions, as reported. Additionally, the firm revealed that all new recruits had been let go in the most recent layoff phase.
Byju’s had announced in June 2022 that it would dismiss roughly 2,500 employees from various departments in order to decrease expenses due to mounting losses. The company stated that it plans to rationalise approximately 5% of its 50,000-strong workforce across product, content, media, and technology divisions in a phased manner, using technology more efficiently and preventing redundancies and job overlaps.
Byju’s is getting ready for the initial public offering (IPO) of Aakash Educational Services, which is expected to be valued between $3.5 to $4 billion, and may have an IPO size of approximately $1 billion.
One of the largest acquisitions in the education sector in India occurred when Byju’s purchased Aakash in April 2021 for roughly $950 million, a combination of cash and stock. Last week, reports revealed that Byju’s secured an unsecured loan of Rs 300 crore ($36.45 million) from Aakash’s primary business operations. This loan, in essence, was an advance payment for the advertising and promotional initiatives that Byju’s has been carrying out for Aakash.
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