Synopsis Aakash Educational Services will issue convertible notes that will convert into equity at a discount of 20% to the listing price of the unit’s planned initial public offering ETtech Byju Raveendran, founder, Byju's (Illustration: Rahul Awasthi) Byju’s, the world’s most valuable edtech startup, is seeking to raise as much as $250 million through the issuance of convertible notes by its tutoring service unit Aakash Educational Services, according to people familiar with the matter. Aakash Educational Services will issue the notes that will convert into equity at a discount of 20% to the listing price of the unit’s planned initial public offering, they said, asking not to be named as the information is not public. Some investors in Byju’s are expected to participate in the round, they said, without disclosing details, citing the sensitivity of the matter. The pre-IPO round at Aakash will help the startup to tide over a liquidity crunch as talks to raise funds at a parent level are getting delayed with a prolonged due diligence process. The Bengaluru-based company had started conversations with bankers late last year to pick arrangers for Aakash’s IPO, Bloomberg News has reported. A representative for Byju’s declined to comment. The three-decade-old Aakash, acquired by Byju’s for about $950 million in 2021, runs brick-and-mortar centres to help teenagers prepare for the gruelling tests that rank them for entry into coveted schools such as the Indian Institute of Technology. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories Discussions to raise funds in Aakash started after talks with private equity firm TPG and two Middle Eastern sovereign wealth funds for a capital increase at the parent level stalled during due diligence, they said. Meanwhile, Byju’s, which grappled with mounting losses after the pandemic-era boom in online tutoring petered out, is in separate talks with creditors to renegotiate an agreement governing a $1. 2-billion loan that’s in breach of covenants. Founder Byju Raveendran — a son of teachers and a former educator himself — is now working on a turnaround plan for the group, pledging to make it profitable this year. Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp. click here! Thursday, 09 Mar, 2023 Experience Your Economic Times Newspaper, The Digital Way! Read Complete Print Edition » Front Page Pure Politics Disruption Companies & Economy More Short-term Yields Up, Re Down After Powell Rate Signal Bond yields at the shorter end of the curve exceeded those of long-tenor sovereign debt in India while the rupee retreated Wednesday, reflecting the likelihood of outflows from local assets after the US Federal Reserve indicated rates would continue to harden. India to Top China as Walmart’s Largest Int’l Market in ’23: CFO India is likely to surpass China and emerge as the largest international market for Walmart this year, a top company executive said. Sebi Mulls PCVs to Offer Long Funding Amid allegations of fierce valuation games that drive startups to dress up numbers and venture capitalists to spin stories to investors, the idea of permanent capital vehicles (PCVs) to offer long, patient funding to unlisted outfits of Indian entrepreneurs is being explored. Read More News on aakash ipo byju's byju's aakash ipo byju's funding byju raveendran aakash liquidity crunch byju's investors aakash educational services convertible notes convertible notes Stay on top of technology and startup news that matters. Subscribe to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox. . . . more less ETPrime stories of the day Auto After a dream restart, why are Jawa and Yezdi selling in niche numbers? Think capacity constraints. 8 mins read Strategy A balancing act: key takeaways for India from G20 ministers’ meeting 7 mins read Investing Growth will be theme in 2023; manufacturing to offer opportunities: Neelesh Surana of Mirae Asset 5 mins read Subscribe to ETPrime.