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BYJU'S to launch Aakash IPO by mid-2024

BYJU’S board has officially approved the IPO, said the Bengaluru-based company. It would announce the appointment of merchant bankers for the IPO shortly.

BYJU'S to launch Aakash IPO by mid-2024

Monday June 05, 2023 , 3 min Read

Edtech unicorn BYJU'S will launch the initial public offering (IPO) of its subsidiary Aakash Education Services Limited by mid-2024.

BYJU’S board has officially approved the IPO, said the Bengaluru-based company, adding that it would announce the appointment of merchant bankers for the IPO shortly.

“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,” BYJU’S said in a statement.

The Bengaluru-based edtech company acquired brick-and-mortar education player Aakash in 2021 for about $1 billion. Since the acquisition, Aakash’s growth has accelerated, said BYJU’S. In the past two years alone, its revenue has tripled, it said.

Aakash’s revenue is expected to reach Rs 4,000 crore, with an EBITDA of Rs 900 crore in the fiscal year 2023-24, according to BYJU'S. In March, Aakash said it expected to close FY23 with a revenue of Rs 3,000 crore.

Earlier, it was reported that the size of the IPO could be in the range of $1 billion, valuing Aakash at $3.5 billion-$4 billion.

ALLEN, which is Aakash’s competitor in the offline test preparation market, plans to go public within the next few years, the Kota-based company recently told YourStory.

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Aakash provides a comprehensive range of offerings that combine classroom-based learning with digital products and services tailored for engineering and medical entrance exams.

According to Ken Research, the test preparation market's revenues are projected to grow at a compound annual growth rate (CAGR) of 9.3% between 2020 and 2025. The online test preparation segment, in particular, is expected to grow at a CAGR of 42.3% during the same period.

The IPO development comes at a time when BYJU'S  lenders have reportedly abandoned discussions with the edtech company on a $1.2-billion loan restructuring. The edtech firm plans to make a quarterly interest payment of about $40 million on the loan to meet the June 5 deadline, a Bloomberg report noted.

If payment is not made by the specified date, the company will default on the loan. This was the biggest term loan B being placed by an Indian startup at the time of the raise, but the loan was unrated.

A few weeks ago, BYJU’S raised $250 million in fresh funding at a flat valuation of $22 billion through structured instruments. The company is expected to close an additional $700 million from a sovereign fund at the same valuation.

Meanwhile, BlackRock recently reduced the valuation of its stake in BYJU’S by 62% as of March 31, 2023. This resulted in BYJU’S being valued at about $8.4 billion.

BYJU’S, which is yet to file its financials for FY22, reported a loss of Rs 4,564.38 crore in FY21—much bigger than its FY20 loss, which stood at Rs 305.5 crore.

Edited by Swetha Kannan