Byju’s pays $230 million due to Blackstone for Aakash buy | The Financial Express

Byju’s pays $230 million due to Blackstone for Aakash buy

The final tranche of payment was scheduled to be paid by September 23 as per a mutual arrangement between the two parties, the source said.

Byju’s pays $230 million due to Blackstone for Aakash buy
In April 2021, Byju’s signed a definitive agreement to purchase AESL in a cash and stock deal worth Rs 6,821 crore.

Edtech major Byju’s has settled $230 million in pending payments to private equity firm Blackstone relating to the acquisition of Aakash Educational Services (AESL), a source aware of the development told FE. The final tranche of payment was scheduled to be paid by September 23 as per a mutual arrangement between the two parties, the source added.

In April 2021, Byju’s signed a definitive agreement to purchase AESL in a cash and stock deal worth Rs 6,821 crore. At that time, Byju’s mentioned that AESL will continue to function independently, although Aakash founders and Blackstone Group were allocated cash and stock exits.

Byju’s had settled Rs 2,830.25 crore in cash payments to Blackstone and the promoters of AESL in the first tranche earlier last year. The remaining Rs 1,983.49 crore in cash payment was to be paid by June 2022, although the parties appeared to have mutually agreed to extend the settlement until September 23.

“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,” Byju’s auditors mentioned in the FY21 financial statements.

Blackstone Group and AESL’s founders JC Chaudhry and Aakash Chaudhry were also set to receive minority shares in Byju’s; the transaction is pending approval in the National Company Law Tribunal (NCLT), according to financial statements.

Note that Blackstone had originally purchased a 37.5% equity stake in AESL for around Rs 1,350 crore in 2019 prior to the deal with Byju’s. With AESL now being sold to Byju’s, Blackstone is also set to receive 0.75-1% shareholding holding in Byju’s.

FE had earlier reported that the deferred payment terms between Byju’s and Blackstone were regulated under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, which provided a legal framework for the transfer of equity instruments between foreign and domestic parties.

The rules mandated 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.

The deferred payments structure to Blackstone and promoters of AESL comes at a time when an $800 million funding deal announced by Byju’s in March 2022 saw two investors pull out after a public statement was made. In July 2022, a large chunk of this capital amounting to $300 million from Sumeru Capital Oxshott was reportedly not deposited with Byju’s. Byju’s CEO and co-founder Byju Raveendran, however, admitted publicly that the $300 million in funds was, in fact, withdrawn by the investors.

The edtech major is currently in the middle of funding talks to raise over $500 million (about Rs 3,900 crore) at a valuation of around $23 billion. It is said to be in discussion with Abu Dhabi’s Sovereign Wealth Funds (SWF) and Qatar Investment Authority (QIA) for the new proposed $500 million round.

According to its financial statement released on Wednesday, Byju’s FY21 net loss shot up to Rs 4,588 crore from Rs 231.69 crore in FY20. The company’s total revenues during the year saw a marginal growth of 3.32% to Rs 2,428.39 crore.

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