Byju Clears Outstanding Dues to Blackstone in Aakash’s $1 Billion Acquisition

Edtech decacorn Byju’s has made a final payment of Rs 1,983 crore to private equity firm Blackstone for the acquisition of Aakash Educational Services, a source familiar with the development told Business Today.

The company was supposed to liquidate the outstanding amount of the large acquisition of the Akash Blackstone investor ticket by June 2022, which was then postponed to September 23, 2022.

A major ticket purchase of $950 million was announced in April 2021. Blackstone owned approximately 38 percent of the online training chain prior to the acquisition.

The Tiger Global-backed company has made nearly $3 billion in acquisitions across 13 deals in the past 18 months including Aakash, Great Learning ($650 million), Epic ($500 million) and Toppr ($150 million).

Byju’s, which is owned and operated by Think & Learn Pvt Ltd., announced its much-delayed financial results for the 2020-21 fiscal year on September 14. The consolidated company’s losses widened almost 20 times to Rs 4,588.75 crore for the financial year ending March 2021 from Rs. Rs.231.69 crore in FY2020. Revenue from operations grew marginally from Rs.2,280.26 crore in FY21 from Rs.2,189 crore in the previous year. Its total revenue fell by just over 3 per cent to Rs 2,428.39 crore in fiscal year 21 from Rs 2,511.77 in the previous fiscal year.

The company’s total expenses were Rs 7,027.47 crore in FY21, up from Rs 2,873.34 crore in FY 2020. Notably, most of its spending last year was attributable to “business promotion expenditures” of Rs 2,251 crore, up from Rs 900 crore in the previous fiscal year.

The company attributed the weak growth to a change in the way it recognizes revenue, as required by audit firm Deloitte Haskins and Sells. In the past, revenue from streaming services was fully recognized at the start of multi-year subscriptions which are now booked during the amortization period. Also, the loans that its customers take cannot be recognized until the installments are collected. This means that the company was unable to book Rs 1,156 crore of revenue coming from the deferred payment terms in FY 21.

There was significant business growth in FY21 throughout FY20, but since this is the first year that new revenue has been recognized due to a Covid-related business model change, approximately 40% of revenue has been deferred to subsequent years. “The rational growth between FY21 and 2020 is a result of changes made in the way BYJU recognizes its revenue, as advised by its auditors,” the company said at the time of the results announcement.

According to the company statement, the Bengaluru-based company recorded nearly Rs 10,000 crore in total revenue in the financial year 22, of which Rs 4,530 crore came during the April-July period. The company also said Akash and higher education platform Great Learning have since doubled their revenue.

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