Byju Raveendran’s Share In Cap Table To Reduce As Akash Chaudhry Wears CEO Hat

By Consultants Review Team Monday, 16 October 2023

Aakash Educational Services, a BYJU subsidiary, is slated to undergo a shift in leadership as Aakash Chaudhry, the promoter of the coaching programmes, is expected to return as CEO. In April 2021, Aakash was acquired by the ed-tech business BYJU's, and the promoter stepped down as CEO. 

According to individuals familiar with the case, Chaudhry would trade a portion of his stake in Aakash with Think & Learn Pvt Ltd, BYJU's parent firm, as part of the arrangement. The Economic Times was the first to report on this development. 

Chaudhry will take over the coaching programs from Abhishek Maheshwari, who stepped down as CEO of Aakash last month. The Chaudhry family, Aakash's promoter family, owns around 18% of the company's shares. According to the source, they will retain approximately 8.5 percent of the tutoring unit and receive approximately 1% of Think & Learn Pvt.'s (the name under which BYJU operates) shares at less than half of the prior $22 billion valuation. Meanwhile, Think & Learn Pvt. will own approximately 51% of the company following the transaction. BYJU's did not react to Business Today's inquiries about the situation. 

In April 2021, the edtech firm paid a mix of cash and shares to purchase Aakash. The offer included a 70% cash component and a 30% equity component, which meant that Aakash promoters and private equity firm Blackstone, which owns around 12% of the company, would have received Think & Learn Pvt.  However, the deal reached a snag last year when Aakash promoters rejected the share swap agreement and demanded payment for the remaining component. 

Furthermore, BYJU obtained $250 million in structured finance from Davidson Kempner, a US-based investor, connected to Aakash's future cash flows and by pledging creator Byju Raveendran's coaching company shares. The edtech then defaulted on the debt, causing Davidson Kempner to take over Aakash. Because Davidson Kempner withheld the remainder following the default, BYJU's was only able to raise around $95 million of the committed $250 million. 

According to the source, the edtech giant is presently in talks with Manipal Education and Medical Group (MEMG) chairman Ranjan Pai, who also happens to be one of the company's initial investors in BYJU's, to raise funds to repay the debt to Davidson Kempner, plus interest. Pai would then receive a stake in Aakash. Pai is expected to contribute approximately $250 million in tranches, with a $170 million initial investment. According to sources, Byju Raveendran's shareholding in Aakash will drop from around 27 percent to 9 percent following the Ranjan Pai transaction.


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