Aakash Educational Services Welcomes Back Aakash Chaudhry as New CEO in BYJU's Reshuffle
BYJU's Complex Acquisition Journey, Resolving Share-Swap and Debt Challenges
16 October 2023
Aakash Chaudhry, the promoter of Aakash Educational Services, is set to return as the CEO, signaling a change in management.
Chaudhry will exchange a portion of his ownership in Aakash with BYJU's parent company, Think & Learn Pvt Ltd.
The acquisition of Aakash by BYJU's in 2021 faced challenges, including share-swap issues and debt troubles, which are now being resolved with investments from Manipal Education and Medical Group's Chairman, Ranjan Pai.
The educational landscape in India is abuzz with news as Aakash Educational Services, a subsidiary of BYJU's, prepares for a significant shift in its management ranks. Aakash Chaudhry, the promoter of this renowned coaching institution, is set to return as the CEO of the company, marking a pivotal change in leadership. This development comes after Aakash was acquired by edtech giant BYJU's in April 2021, a deal that initially saw Aakash's promoter relinquish the management position.
As part of the new arrangement, Chaudhry will exchange a portion of his ownership in Aakash with Think & Learn Pvt Ltd, BYJU's parent company. These changes reflect the ongoing evolution of leadership within the company and signal a new chapter in the partnership between Aakash and BYJU's.
Chaudhry's return to Aakash as CEO follows the departure of Abhishek Maheshwari, who held the position until recently. The Chaudhry family, the original promoters of Aakash, currently holds around 18% of the company's shares. Post-deal, their ownership will be reduced to approximately 8.5% in the tutoring unit. Simultaneously, they will receive about 1% of Think & Learn Pvt.'s shares at a valuation less than half of its previous $22 billion worth. Think & Learn Pvt. will solidify its position with around 51% ownership after the deal's completion. BYJU's did not respond to queries regarding this development, keeping details somewhat shrouded in mystery.
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The acquisition of Aakash by BYJU's in April 2021 was a significant move in the edtech sector. The deal involved a combination of equity and cash, with 70% of the payment being in cash and the remaining 30% in equity. This arrangement meant that both Aakash's promoters and private equity firm Blackstone, which owns about 12% of Aakash, would receive shares of Think & Learn Pvt.
However, this transaction faced challenges, with Aakash's promoters initially rejecting the share-swap deal and demanding cash for the remaining component. Moreover, BYJU's encountered difficulties with its structured debt, ultimately defaulting on the loan. This prompted a move by Davidson Kempner, a US-based investor linked to future cash flows of Aakash, to seek control of the company. BYJU's was only able to raise approximately $95 million of the committed $250 million, as Davidson Kempner withheld the balance after the default.
To resolve these financial issues, BYJU's is in discussions with Manipal Education and Medical Group (MEMG) Chairman Ranjan Pai, an early investor in BYJU's. Pai is expected to invest approximately $250 million in tranches, starting with an initial investment of $170 million. As a result, Byju Raveendran's stake in Aakash will decrease to 9% from about 27%.
Aakash Chaudhry's return to the helm of Aakash Institute is seen as a significant step in stabilizing the company's future. The ongoing efforts to resolve financial matters and shareholder issues indicate that BYJU's remains committed to its investment in Aakash. As these developments unfold, they will undoubtedly impact the edtech landscape in India, showcasing the ever-evolving dynamics within the industry.