Aakash Institute says no to share swap with Byju’s, eyes a cash payout instead

Indian edtech startup Byju’s acquired brick-and-mortar based educational institution, Aakash Institute, back in 2021 for $940 million in a cash and stock deal. Post the deal, which included a 100 percent sale of the company and valued Aakash Educational Services Ltd (AESL) at $1 billion, Byju’s and its parent company, Think and Learn Private Ltd (TLPL), acquired around 70 percent stake in Aakash Educational Services Ltd (AESL), while the Chaudhry family and Blackstone collectively hold a minority stake of around 30 percent. However, the proposed merger is yet to receive the final nod from the National Company Law Tribunal (NCLT). Amid the delay, Byju’s parent company moved for a share swap, a condition that was agreed upon by both the companies while negotiating the deals of the agreement and now has been rejected by Aakash Institute founders.

As per reports, Blackstone and the Chaudhry family, which are the two minority shareholders in Aakash Educational Services Ltd (AESL), have declined to swap their shares with Think & Learn Pvt Ltd causing a rift between the two groups, which in turn has lead Byju’s parent company, Think and Learn Private Ltd to issue a notice to the Chaudhry family.

Separately, the Indian ed-tech startup has been in the middle of a financial storm since last year. The company that was valued at $22 billion early last year has laid off thousands of employees since October 2023 in a bid to cut costs following a drastic drop in the demand for online tutoring in the post Covid-19 era. As per a Reuters report, performance incentives, bonuses and appraisals have been stalled and employees are looking for a way out.

That said, financial troubles aren’t the only thing that is battering down what was once a promising startup. The company is also locked in a legal battle with the investment management firm Redwood. In the lawsuit filed by the Indian edtech startup in the New York Supreme Court, the company has challenged the acceleration of a $1.2 billion term loan B facility and disqualify the lender for its “predatory tactics.” Byju’s said that Redwood purchased a significant portion of the loan while primarily trading in distressed debt, which was contrary to the conditions of the term loan facility.

In addition to this, the company is also facing scrutiny from the Corporate Affairs Ministry. The report came a day after Deloitte and three board members of Byju’s severed ties with the company amid an escalating legal battle with its lenders.