Edtech major Byju’s is scheduled to settle cash dues to the tune of nearly Rs 1,983.47 crore to Blackstone and other parties in about a week’s time. These relate to the acquisition of Aakash Educational Services (AESL), according to the FY21 financial statement. The company must also allocate equity shares to Blackstone and AESL worth Rs 2,007.74 crore, once the merger with AESL is completed.
Byju’s is reported to be in talks with investors, including Abu Dhabi’s Sovereign Wealth Funds (SWF) and Qatar Investment Authority (QIA) to raise over $500 million (about Rs 3,900 crore) at a valuation of around $23 billion. A previous funding round in March this year, for a reported amount of $800 million, was not concluded.
“As per the terms of the agreement for acquisition of Aakash Educational Services, consideration to the extent of Rs 1,983 crore was due to be paid by the company to the sellers in June, 2022. This has been deferred to September 23, 2022,” the auditors mentioned in the financial statements. Blackstone Group and AESL founders, JC Chaudhry and Aakash Chaudhry, were also set to receive minority shares in Byju’s; the transaction is pending for approval in the National Company Law Tribunal (NCLT), according to financial statements.
Blackstone was reportedly set to receive a 0.75-1% of the equity in Byju’s.
Suvigya Awasthy, Associate Partner at PSL Advocates and Solicitors, said that the transaction between Byju’s and Blackstone is primarily regulated by the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 which envisages that payment of consideration for transfer of equity instruments may be done on a deferred basis.
Awasthy added that a maximum of 25% of the total consideration may be paid on a deferred basis under existing regulations. However, a maximum period of only 18 months from the date of transfer agreement is available for payment of such consideration, subject to compliance with RBI’s pricing guidelines. In case the deadline for deferred payment of consideration elapses, Byju’s would require RBI approval for any extension, he added.
In April 2021, Byju’s signed a definitive agreement to purchase AESL in a cash and stock deal. At that time, Byjus mentioned that AESL will continue to function independently although Aakash founders and Blackstone Group were allocated cash and stock exits. Byju’s net loss shot up to Rs 4,588 crore in FY21 from Rs 231.69 crore in FY20. Revenues rose by just 3.32% to Rs 2,428.39 crore during the year.