Byju’s parent company, Think & Learn, has reportedly taken an unsecured loan of Rs 300 crore from Aakash Educational Services. The loan has been taken for “principal business activities”. It has been granted at an interest rate o 7.5 per cent.
Aakash is a wholly-owned subsidiary of the group. It was acquired in April 2021 for a cash and stock deal worth $950 million.
Inside the news. The loan is reported to be taken for “principal business activities”, which could denote marketing exercises that Byju’s undertakes, in bulk, for its multiple divisions and subsidiaries.
The question that arises though is: Why was a loan needed when the company had recently announced investment from existing investors, mentioned its focus on moving towards profitability, and have also been looking at cutting costs? One obvious possible answer is valuation expectation mismatch for new funds planned to be raised.
One last thing. News about Byju’s also raises questions about the overall ed-tech sector growth and prospects. Now more than ever, it is especially important for investors looking at this space to dig deeper into each company’s value versus valuation and keep investing in the underlying growth stories and not spreading panic.
Source: The Economic Times, Business Standard