Aakash promoters, Blackstone decline BYJU’S' share swap offer: Report

Aakash Educational Services Ltd’s (AESL) minority stakeholders, private equity firm Blackstone Group, and the Chaudhry family have reportedly declined to exchange their equity holdings in the test preparation subsidiary unit for shares in BYJU'S parent company—Think & Learn Pvt Ltd.

Mint has reported that both Blackstone and the Chaudhry family have declined to comply with BYJU’S' March notice to execute the share swap as per the original agreement, citing clauses in the original share purchase agreement. 

The Aakash shareholders cited governance issues in the parent entity as the key reason for declining the share swap, while the Chaudhry's specifically pointed to delays in filing FY22 financial statements, defaults with US lenders, and other ongoing probes as their reasons for not acquiring a stake in Think & Learn, the report added.

YourStory has reached out to BYJU'S, Blackstone, and AESL Co-founder Aakash Chaudhry for comments.

In 2021, BYJU’S acquired Aakash for approximately $950 million, with around 70% of the deal paid in cash and the remaining portion meant to be adjusted against Think & Learn's equity.

Collectively, the Chaudhry family and Blackstone hold a 30% stake in AESL, while Think & Learn owns 43%, and its founder, Byju Raveendran, owns 27%. 

As per the original agreement, Blackstone was slated to receive approximately 0.75-1% stake in the parent entity, while the Chaudhry family was expected to receive around 1.5-2% stake in exchange for their equity stakes in Aakash, based on BYJU’S $11 billion valuation at the time, the Mint report noted.

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This development comes a day after The Morning Context reported that US-based investment fund Davidson Kempner Capital Management has levelled allegations of financial misconduct against BYJU'S, and assert control over Aakash and its accounts.

In May, the Bengaluru-based firm had raised $250 million (~ Rs 2,000 crore) at a flat valuation of $22 billion through structured instruments from Davidson Kempner against its Aakash shareholding. Raveendran is said to have offered a portion of his 27% equity in Aakash as collateral for the loan. Davidson Kempner has declared the loan to be in default, according to the Mint report.

These developments concerning Aakash pose concerns for BYJU'S, which plans to launch the initial public offering (IPO) of Aakash by mid-2024, potentially providing the firm with much-needed financial relief.

In June, it was reported that BYJU'S is approaching investors for divesting a portion of its stake in Aakash, with Think & Learn Pvt Ltd, considering a potential reduction of up to 20% in its stake.

According to The Morning Context, a group of investors, spearheaded by Manipal Healthcare Enterprises founder Ranjan Pai, is engaged in discussions to invest an amount between Rs 500-700 crore in Aakash.

The edtech unicorn has been plagued with mounting losses, layoffs, and pending loans after the end of the pandemic-led edtech boom.