Now, Blackstone objects to Aakash Educational Services' debt conversion

Think & Learn Pvt Ltd, which operates under Byjus brand name, is currently the major shareholder of Akash Education Services, a physical tutorial company

Yet another storm is brewing at Byju’s, with Blackstone, the US-based private-equity firm that owns 12 per cent in Akash Education Services (AES), objecting to Aarin Capital Partners converting its debt into equity in AES.

This, said Blackstone, would dilute its (Blackstone’s) stake in AES, a Byju’s subsidiary.

The debt of $300 million, when converted into equity, will increase the stake of Bengaluru-based billionaire Ranjan Pai-led Aarin Capital Partners in AES to 39 per cent and dilute the stake of existing shareholders, including Blackstone.

The debt conversion is happening at a lower equity valuation of $600 million for AES when compared to the $950 million paid by Think & Learn in 2021, when it had acquired the company from the founders, the Chaudhry family.

At present the Chaudhry family and Blackstone jointly own 30 per cent in the company.

Think & Learn, which operates under the Byju’s brand name, is the major shareholder of AES, a physical tutorial company.

After the conversion, Think & Learn will own 26 per cent in AES while Byju Raveendran, founder of the edutech firm, will have 17 per cent (see chart).

A source close to the development said Blackstone and other investors had written to the board of AES and Indian regulators, objecting to the debt-conversion plan. 

Emails sent to AES on Tuesday did not elicit any response till the time of going to press.

Blackstone did not comment on the matter.

Apart from the shareholders of AES, overseas debt investors in Think & Learn had objected to the debt conversion, saying it would impact their interests due to a lower valuation. A Bengaluru court, however, did not give any relief to the petitioners on Monday.

AES’s profits rose 82 per cent to Rs 79.5 crore and reported a 45 per cent rise in revenue to Rs 1,421 crore in 2021-22.

Think & Learn had reported a loss of Rs 8,000 crore in the same period on operating revenue of Rs 5,041 crore. 

Akash shareholding 
 

Ranjan Pai: 39%

TLPL:  26%

Byju Raveendran: 17%

Blackstone/Chaudhry family: 18%