BYJU’S Owned Aakash To Head For IPO Around Mid-2024

Edtech decacorn BYJU’S on Monday (June 5) said it will launch the initial public offering (IPO) of its subsidiary Aakash Educational Services Limited (AESL) around mid-2024. 

In a statement, the startup said its board has granted the official sanction for the IPO and it will soon announce the appointment of merchant bankers to ensure a planned and successful listing next year.

“The upcoming IPO will provide a significant capital infusion to bolster Aakash’s infrastructure, broaden its reach, and extend high-quality test-prep education to a larger number of students across the nation,” the statement added. 

The development comes at a time when the edtech startup has been in the news for all the wrong reasons recently and is also under pressure for repayment of a loan. BYJU’S was in talks with creditors for restructuring its $1.2 Bn term loan B, however, as per a report last week, the creditors pulled out of the negotiations. Today is the deadline for BYJU’S to make a payment for the loan.

Last month, BYJU’S raised a debt funding of $250 Mn from US-based alternative investment firm Davidson Kempner. 

As per reports, initially the plan was for BYJU’S to list in the US through the SPAC (special purpose acquisition company) route. However, it has shelved that plan now and has decided to go for the IPO of its subsidiary Aakash, which it claims to be profitable.

Aakash is one among the large number of companies acquired by BYJU’S over the years. The Byju Raveendran-led startup acquired Aakash, which provides coaching for exams like NEET and IIT-JEE, in April 2021 for $1 Bn.

Aakash has not filed its financial statements for FY22 with the Ministry of Corporate Affairs. In FY21, Aakash’s revenue from operations dropped 23.5% to INR 982.7 Cr from INR 1,214 Cr in FY20. Its profit also dropped 73.6% to INR 43.6 Cr in FY21 from INR 165.7 Cr in FY20. 

Like most of the other edtech startups, the slowdown in business after the reopening of schools and educational institutes after the Covid-19 pandemic has hit BYJU’S hard. In FY21, BYJU’S reported a net loss of INR 4,588 Cr, a massive 1,880% or 19.8X jump from a loss of INR 231.69 Cr in FY20. 

BYJU’S cited the high cash burn of WhiteHat Jr, the code learning platform it acquired for a record $300 Mn in August 2020, as one of the reasons for the sharp increase in its loss in FY21. 

BYJU’S is yet to file its financial statements for FY22.

The edtech company has fired 2,500 employees since last year in order to bring down its costs. It is also being investigated by the Enforcement Directorate (ED) for alleged violation of Foreign Exchange Management Act (FEMA) norms. However, as per reports, the ED has not found any FEMA violations by the edtech startup.

Apart from this, BYJU’S has also seen many of its investors marking down its valuation recently. Last week, BlackRock, which owns less than 1% in BYJU’S, slashed its valuation by 62% to $8.36 Bn from $22 Bn. 

The announcement to launch the IPO of Aakash comes at a time when a number of Indian startups like boAt, Droom, PharmEasy, Capillary Technologies have deferred their plans to go public in the last year or so. As such, the IPO of Aakash may clash with the public offering of other startups if they decide to go ahead with it in 2024. As per reports, Bhavish Aggarwal-led Ola Electric is also looking to launch its IPO before the general elections in the country next year.

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