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byju’s: Byju’s raises debt of Rs2K cr linked to future Aakash IPO

Mumbai|Bengaluru: Byju’s has closed a ₹2,000-crore round from Davidson Kempner Capital in a structured credit transaction against the cash flows of its test prep subsidiary Aakash Educational Services, two people directly aware of the development told ET.

According to the people cited above, the transaction, which closed on Friday, is a three-year loan facility with an equity upside linked to Aakash’s planned public listing in the near future.

The transaction, they said, was raised via a combination of non-convertible debentures (NCDs) and a smaller portion of compulsorily convertible debentures (CCDs). They’re linked to Aakash’s final valuation in the proposed initial public offer (IPO), that will roughly translate to a 12% annualised fixed coupon rate for the company.

“Apart from Davidson Kempner, Byju’s was also in talks with Apollo Global Management for the transaction and had also received a term sheet, but eventually decided to go ahead with the former’s offer,” said one of the persons cited above.

Byju’s didn’t respond to queries. Apollo Global and Davidson Kemper declined to comment.

Byju’s will be able to upstream the cash raised from Davidson Kempner to the holding company to meet its financing needs.

This comes weeks after its office premises were searched by Directorate of Enforcement (ED) officials. India’s federal financial investigation agency has been looking into the edtech unicorn’s compliance with the Foreign Exchange Management Act (Fema) for 2011-23. Edtech Stress & Other Woes
According to people aware of the matter, Byju’s is expected to use some of the new capital to refinance parts of its term loan B, which it raised in 2021.

ET has reported on Byju’s efforts to reach a deal with creditors, who asked for at least $200 million of prepayment on the $1.2-billion loan. Byju’s chief executive and cofounder Byju Raveendran has also offered higher interest rate on the term loan B as the renegotiation is linked with delay in the company furnishing its financial results for FY21 and FY22.

Byju’s has been looking to stitch up new financing as the online education sector comes under pressure. Offline education centres have reopened and Covid-19 tailwinds have petered out. The company was last valued at $22 billion and remains the country’s most valued startup. It had last closed a $250-million funding round in October last year, at the same valuation.

However, Blackrock, one of its investors, recently marked down its holding in the edtech firm by 50%, pegging valuation at $11.5 billion. Top internet startups such as Swiggy, Pharmeasy and Pine Labs have also seen their valuation being lowered by funds managed by their investors.

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