Aakash Chaudhry set to return as CEO of Aakash Educational Services as Byju’s closes in on share swap deal

As part of the agreement, Aakash Chaudhry will exchange a portion of his ownership in Aakash with Think & Learn Pvt Ltd, the parent company of Byju's.

Aakash Chaudhry, the promoter of Aakash Educational Services, is poised to return as the CEO of the tutoring unit that Byju’s acquired in April 2021, as the two parties are finally closing in on a deal after months of dispute, people aware of the matter told Moneycontrol.

As part of the agreement, Chaudhry will exchange a portion of his ownership in Aakash with Think & Learn Pvt Ltd, the parent company of Byju's. His reinstatement as the CEO of the test preparation unit is contingent on the completion of the deal, the people said, requesting anonymity. Chaudhry will take over from Abhishek Maheshwari, who quit as CEO of Aakash last month.

Chaudhry family, the promoter family of Aakash, which holds about 18 percent of the company's shares, will continue to hold around 8.5 percent in the tutoring unit and receive about 1 percent of Think & Learn Pvt.'s shares at less than half of its previous $22 billion valuation, post-transaction, the people said. Think & Learn Pvt., meanwhile, will hold around 51 percent of the company after the deal, sources further said. The Economic Times first reported the development.

Byju's and Aakash did not respond to queries sent by Moneycontrol.

Byju’s had acquired Aakash in April 2021 for a mix of equity and cash deal. The deal had a 70 percent cash component and 30 percent equity component, meaning, promoters of Aakash and private equity firm Blackstone, which holds about 12 percent stake in the company, would have got shares of Think & Learn Pvt.

However, the deal hit a roadblock last year, with the promoters rejecting for share swap and demanding cash for the remaining component after Byju’s ran into troubles on multiple fronts, raising concerns over its valuation.

Adding to this, Byju's raised $250 million in structured debt from Davidson Kempner, a US-based investor, linked to future cash flows of Aakash and by pledging founder Byju Raveendran's shares in the tutoring unit. However, Byju's defaulted on the loan, prompting Davidson Kempner to seek control of the tutoring unit. Byju's was only able to raise about $95 million of the committed $250 million, as Davidson Kempner withheld the balance following the default.

Byju's is now in discussions with Ranjan Pai, one of the company's earliest investors, to raise funds to repay the debt to Davidson Kempner, along with interest. Following this, Pai would get a stake in Aakash. Pai might invest about $250 million in tranches, with an initial investment of $170 million.

According to the people quoted above, post the Ranjan Pai deal, Raveendran, who currently holds approximately 27 percent in Aakash in his personal capacity, will see his stake reduced to around 9 percent.

An agreement between Byju's and Aakash would bring some cheer to the troubled edtech company, which has been at loggerheads with the promoter group of the tutoring unit since last year. Aakash is Byju's' biggest acquisition and largest asset. Byju's has been looking to take Aakash public since the start of this year to unlock value, but has been unable to do so due to a host of domestic and international issues.