Amid ongoing debt covenant discussions with hedge fund Davidson Kempner Capital Management, Aakash Educational Services Ltd (AESL) has taken significant steps to reconstitute its board. Reports indicate that the edtech startup, backed by Byju’s, encountered difficulties in meeting certain loan agreement covenants, leading to Davidson Kempner’s decision to withhold disbursement of a $250 million loan that was initially extended to AESL. As a means to bolster the board’s strength and governance, Byju’s will be nominating three of its representatives from Think and Learn to the board, alongside two independent directors. It is anticipated that the newly formed board will take charge within the next two weeks. Additionally, there are indications that the board may seek new auditors, and Byju Raveendran, the founder of Byju’s, will be the sole executive representative from the parent company on the AESL board.
In the midst of these developments, tensions have arisen as Think & Learn (Byju’s parent company) sent a notice to the founders of AESL expressing their reluctance to proceed with a previously agreed share swap that was part of the acquisition deal in 2021. At that time, Byju’s acquired AESL, which operates coaching centers, in a cash and stock transaction worth approximately $940 million. Post-acquisition, Think & Learn held a 43% stake, while Raveendran owned 27% of the company. The remaining stake in AESL is held by founder Chaudhry’s family, maintaining about 18%, and Blackstone holding the remaining 12%.
Despite the challenges, Aakash Educational Services remains optimistic about its future prospects. The company is projecting a remarkable three-fold growth, with expected revenue of Rs 3,000 crore for the financial year 2023, compared to pre-acquisition figures. Buoyed by this promising performance, AESL is also contemplating the possibility of going public with an initial public offering (IPO) to further fuel its expansion and development.
