Management rejig at Aakash: Promoter Chaudhry to return as CEO, Byju Raveendran’s share in cap table to reduce

Aakash Educational Services, a subsidiary of BYJU’s, is set to see a change in its management ranks as Aakash Chaudhry, the promoter of the coaching classes, is likely to return as the CEO of the company. Aakash was acquired by edtech company BYJU’s in April 2021 after which the promoter gave up the management position.

As part of the agreement, Chaudhry will exchange a portion of his ownership in Aakash with Think & Learn Pvt Ltd, the parent company of BYJU’s, sources aware of the matter told Business Today. 

This development was first reported by the Economic Times.

Chaudhry will take over the reins of the coaching classes from Abhishek Maheshwari, who quit as CEO of Aakash last month. Chaudhry family, the promoter family of Aakash, holds about 18 per cent of the company's shares. After the deal, they will continue to hold around 8.5 per cent in the tutoring unit and receive about 1 per cent of Think & Learn Pvt.'s (name under which BYJU’s does its business) shares at less than half of its previous $22 billion valuation, the source explained. Think & Learn Pvt., meanwhile, will hold around 51 per cent of the company after the deal.

BYJU’s did not respond to Business Today’s queries on the development.

The edtech company had acquired Aakash in April 2021 in a mix of equity and cash deal. The deal had a 70 per cent cash component and 30 per cent equity component, meaning, promoters of Aakash and private equity firm Blackstone, which holds about 12 per cent stake in the company, would have received shares of Think & Learn Pvt.

But the deal hit a roadblock last year, with Aakash promoters rejecting the share swap deal and demanding cash for the remaining component.

Moreover, BYJU's raised $250 million in structured debt from Davidson Kempner, a US-based investor, linked to future cash flows of Aakash and by pledging founder Byju Raveendran's shares in the coaching company. Then, the edtech defaulted on the loan, prompting Davidson Kempner to seek control of Aakash. BYJU's was only able to raise about $95 million of the committed $250 million, as Davidson Kempner withheld the balance following the default.

The edtech major is now in discussions with Manipal Education and Medical Grpup (MEMG) chairman, Ranjan Pai, who also happens to be one of the company's earliest investors in BYJU's, to raise funds to repay the debt to Davidson Kempner, along with interest, the source noted. Following this, Pai would get a stake in Aakash. Pai is likely to invest about $250 million in tranches, with an initial investment of $170 million.

Sources noted that after the Ranjan Pai deal, Byju Raveendran’s stake in Aakash will reduce to 9 per cent from approximately 27 per cent.