Byju’s gears up for $1-billion listing of subsidiary Aakash in India next fiscal

Representative image

Byju’s, India’s most-valued startup, is preparing to list its subsidiary Aakash, an offline coaching chain, in the first half of next year, sources familiar with the development told Moneycontrol.

“Aakash is profitable and is a strong brand that is better understood in India. Investors were of the view that it should be listed here,” one of the sources cited above said, adding that while Byju’s still has ambitions of a US listing, it might happen well after Aakash’s listing.

The size of the initial public offering (IPO)  could be in the range of a billion dollars, valuing Aakash at $3.5-$4 billion. While it expects to file papers with the market regulator in January next year, it plans to list by June 2024, or the first half of FY24.

The move to sell a part in Aakash to the public comes at a time when Byju's has delayed its own IPO amid uncertain macroeconomic conditions that led to public shareholders dumping shares of loss-making companies.

Shares of new-age loss-making tech companies like Zomato, Paytm, and PBFintech among others have been down 56 percent, 50 percent, and 59 percent respectively since the start of this year.

Byju's had reported a 20x jump in its FY21 loss to Rs 4,589 crore on a revenue of Rs 2,428 crore.

Techcrunch was the first to report on the development. While Byju's did not respond to queries from Moneycontrol at the time of writing this story, Aakash declined to comment.

Byju’s acquired Aakash in April 2021 for a cash and stock deal of almost $950 million in what was one of the biggest acquisitions in the Indian education space. The company then deferred part of its payment for Aakash to September 23, 2022.

Byju's eventually managed to pay 19 billion rupees ($234 million) to Blackstone Inc, settling its dues owed to the private-equity firm as part of the deal to buy Aakash Educational. While closing the deal, Byju's had paid all of Aakash's shareholders, except Blackstone as the PE firm had agreed on deferred payment.

One of India’s leading coaching institutes, Aakash offers JEE and NEET preparation, among others, and has been active since 1988.

It was in news earlier this week when it disclosed that Think & Learn Pvt, the company that operates Byju’s, will take an unsecured loan of Rs 300 crore ($36.45 million) from its wholly owned subsidiary Aakash Educational Services for its “principal business activities.”

A Byju’s spokesperson has said then that the loan from Aakash Educational Services is in effect an advance against the marketing activities and campaigns that Byju’s has been running for Aakash.

Byju’s Aakash has grown more than 100 percent since the acquisition, the spokesperson said, adding that it is only for principal business activities that a subsidiary and the parent company can give or receive loans.

“In this case, the principal business activity is marketing for the core business of Byju’s Aakash on which the group has already spent and is now being reimbursed,” the spokesperson said.