Edtech decacorn Byju’s is planning to take its wholly-owned test prep unit Aakash Educational Services Ltd public by mid-next year.
Byju’s, which counts Sequoia Capital, Lightspeed, Silver Lake, CPPIB, Tencent and Naspers, among others as its marquee investors, on Monday said that the company’s board has given approval for Aakash’s initial public offering (IPO) and it will soon announce the appointment of the merchant bankers for a listing next year.
The announcement comes at a time when it has continued to raise millions of dollars in debt and equity. The company had last raised $250 million in debt from US-based Davidson Kempner Capital Management. It is looking to raise as much as $1 billion in this round in a mix of debt and equity.
Incidentally, the announcement also comes on the same day the company is expected to pay the $40 million instalment of its highest unrated loan of $1.2 billion. If the company is unable to make the quarterly interest payment, the loan - which is seen as the primary cause of the firm's financial difficulties - will default.
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 company said in a statement, reported Bloomberg.
Aakash, which offers coaching for competitive exams via offline brick-and-mortar centres, is on track to reach Rs 4,000 crore in revenue with an EBITDA (earnings before interest, taxes, depreciation, and amortization) of Rs 900 crore in the fiscal year 2023-24, Byju’s said.
Byju's acquired Aakash in April 2021 in a cash-and-stock deal worth approximately $1 billion. This acquisition marked the largest in India’s edtech history, even as Byju’s had been actively pursuing acquisitions up until 2021.
Since its acquisition, Aakash has benefitted from multiple synergies with Byju’s that have accelerated its growth - clocking a three-fold increase in revenue in the last two years, Byju’s said, adding that the IPO will allow both companies to offer a wider range of products to students.
Aakash currently runs over 325 centres and serves more than 400,000 students across the country. With over 35 years of legacy in test prep, the company is one of the most popular brands for JEE (Joint Entrance Examination) and NEET (National Eligibility cum Entrance Test) coaching.
