Edtech major BYJU’s has announced a plan to launch the IPO of its subsidiary Aakash mid-next year. This comes as the start-up is under pressure and faces a tight deadline to make a $40 million quarterly interest payment.
The troubled Decacorn is under pressure to make a quarterly interest payment of about $40 million to meet the June 5 deadline on a $1.2 billion loan. This loan is at the center of the company’s financial troubles, and failure to pay on that date means the company may default on the loan, Bloomberg reported.
BYJU’s chose not to comment on a businessline questionnaire regarding the payment deadline and whether it would default. However, Byjus, in a press release, outlined the IPO timeline announcement regarding its test preparatory platform Aakash, which it had acquired in a cash and stock deal of $950 million last year. The company said that its board has given approval to launch the initial public offering (IPO) of its subsidiary mid next year.
“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,” the company said in a release.
An analyst who did not want to be identified, however, expressed surprise at the timing of the announcement, asking, “Why would a company announce a full year earlier that it intends to list a subsidiary but not respond to issues of whether it can meet its immediate financial obligations?”
India’s most valued start-up was even reported to have been in talks with creditors to restructure the $1.2 billion loan, but creditors had withdrawn from the talks. The sum of the loan is reported to be the largest unrated loan to a startup ever.
Last month, sections of the media reported that it had raised $250 million in funding from Davidson Kempner Capital Management as a part of its ongoing $1 billion fund-raising round. The company, though, had not confirmed the fund-raising. Also, the valuation for this round is not known yet. Its previous round was raised at a flat valuation of $22 billion in October 2022, which had been the same since March 22.
The edtech player faces more issues than one. It even faced a raid by the Enforcement Directorate (ED) for alleged FEMA violations in April this year. The ED seizure report noted that “various incriminating documents and digital data were seized” and had said other FEMA violations were found. The charge was contested by the company, and investigations in the case are ongoing.
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