Aakash Chaudhry's return as Aakash Educational Services CEO imminent
What's the story
Aakash Chaudhry is gearing up to resume his role as CEO of Aakash Educational Services, a tutoring branch purchased by BYJU'S in April 2021.
This development comes as BYJU'S and Aakash Educational Services iron out a deal after facing several disagreements.
As part of the arrangement, Chaudhry will trade some of his Aakash ownership for shares in Think & Learn Pvt Ltd, BYJU'S parent company.
Chaudhry will step in for Abhishek Maheshwari, who stepped down as Aakash's CEO last month.
Details
Share swap deal and ownership changes
The Chaudhry family, Aakash's promoters, own roughly 18% of the company's shares.
After the deal, they'll keep about 8.5% of the tutoring unit and acquire around 1% of Think & Learn stocks at a value less than half of its previous $22 billion valuation.
Think & Learn Pvt Ltd will possess about 51% of the company once the deal is done. The agreement hinges on the deal's completion, which hit roadblocks last year due to BYJU'S valuation concerns.
What Next?
BYJU'S debt and Ranjan Pai's investment
BYJU'S secured $250 million in structured debt from US-based investor Davidson Kempner, tied to Aakash's future cash flows, and by pledging founder Byju Raveendran's stocks in the tutoring unit.
However, BYJU'S defaulted on the loan, prompting Kempner to pursue control of the unit.
BYJU'S is now in talks with Ranjan Pai, one of its investors, to raise funds to repay the debt plus interest.
Pai may invest around $250 million in installments, kicking off with an initial $170 million investment.
Insights
Impact on Byju Raveendran's stake in Aakash
Once the deal with Ranjan Pai is finalized, Byju Raveendran's stake in Aakash will drop from about 27% to nearly 9%.
The agreement between BYJU'S and Aakash is anticipated to alleviate some tension for the struggling edtech firm, which has been at loggerheads with the tutoring unit's promoter group since last year.
BYJU'S has been attempting to take Aakash public since early this year to unlock value but has encountered hurdles due to various domestic and international issues.