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 notes will be sold by the company’s tutoring service, Aakash Educational Services, at a 20% discount to the unit’s planned initial public offering price, said the people, who did not want to be named because the information is not public.They said that some of Byju’s investors are likely to join the round, but they wouldn’t say who because the situation is sensitive.
The pre-IPO financing at Aakash will help the business weather a liquidity crisis while efforts to seek money at the parent level are stalled owing to a lengthy due diligence procedure. According to Bloomberg News, the Bengaluru-based startup began discussions with bankers late last year to choose arrangers for Aakash’s IPO.
Byju’s spokesman refused to comment.
The company Aakash, which has been around for 30 years, was bought by Byju’s for about $950 million in 2021. It runs physical facilities to help kids prepare for the hard tests that help them get into prestigious colleges like the Indian Institute of Technology.They said that discussions to raise cash in Aakash began after negotiations with private equity firm TPG and two Middle Eastern sovereign wealth funds for a capital increase at the parent level stopped during due diligence.
Meanwhile, Byju is in separate negotiations with creditors to rework a loan 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 recovery plan for the organization, aiming to make it profitable this year.
