27 February 2024

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BYJU’S to launch IPO of Aakash next year

Byju’s, the world’s most valuable edtech startup, has approved the initial public offering (IPO) of its tutoring services business, Aakash Educational Services, postponing the previously planned 2023 IPO and intending to go public by mid-next year.

Its board of directors approved this critical undertaking, and the appointment of merchant bankers for the IPO will be announced soon to ensure a planned and successful offering next year, according to a statement issued on June 5.

Moneycontrol earlier stated that Byju’s was preparing for Aakash’s $1 billion IPO, which would value the tutoring services division at $3-4 billion.

The announcement comes as the company confronts a deadline to make a $40 million quarterly interest payment on a loan it obtained in November 2021.

Since December 2022, when the company initiated talks with its creditors to renegotiate the terms of its debt, it has been in a disagreement with them. Creditors stopped these talks last week after taking Byju’s US business to court in Delaware, saying that it had hidden $500 million from them. These charges have been disputed by Byju’s.

The companies decision to postpone Aakash’s IPO until next year comes at a time when the IPO market is heating up. According to an EY analysis, India was ranked top in the world in terms of the number of IPOs in the first quarter of 2023.

Byju's

Aakash is on track to generate Rs 4,000 crore in revenue in FY24 (2023-24), with an EBITDA (earnings before interest rate depreciation and amortisation) of Rs 900 crore, according to Byju’s. Byju’s paid $900 million for Aakash in April 2021.

According to persons familiar with the situation, the company began discussions with investment bankers late last year and sought guidance from Goldman Sachs and Citi Bank. In March, both Goldman and Citi sent studies outlining Aakash and its possible valuation. 

Byju’s board sanctions Aakash IPO

According to sources, Aakash generated a revenue of Rs 1,459 crore and an EBITDA of Rs 227 crore in FY22 (2022-23). The corporation has yet to file its FY23 results. According to the study, Aakash expected revenue of Rs 2,553 crore and EBITDA of Rs 646 crore in FY23.

Aakash, one of India’s major test preparation companies for engineering and medical entrance exams, has over 325 centers across the country and currently serves over 400,000 students. Earlier in March, Many sources revealed that Byju’s and Unacademy were looking into combining Aakash Educational Services with the SoftBank-backed hybrid test preparation platform.

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