According to persons familiar with the situation, Byju's, the largest online education provider in India, is completing plans for a $1 billion initial public offering of its tutoring division, Aakash Educational Services.

As it searches for arrangers for the listing, the company is in discussions with at least four foreign banks, including JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc., and Morgan Stanley, as well as Indian banks like Kotak Mahindra Bank Ltd. and Axis Bank Ltd., according to one of the people who asked not to be identified discussing private conversations. According to the source, the asset might be worth between $3.5 billion and $4 billion.

Byju’s could pick the lead bank within two weeks, and a Draft Red Herring Prospectus, the document to kick off an IPO process in India, is set to be filed in January or February, the people said. Byju’s aims for the IPO to take place around August-September, they said.

The three-decade-old Aakash, acquired by Byju’s for about $950 million last year, runs brick-and-mortar centers to help teenagers prepare for the grueling tests that rank them for entry into coveted schools such as the Indian Institute of Technology. The offline test prep leader has more than 200 centers dotting the country and has ramped up its digital test prep offerings as well.

A spokeswoman for Byju’s declined to comment. Representatives for JPMorgan, Citigroup, Goldman Sachs, Morgan Stanley, Kotak and Axis didn’t immediately respond to requests for comment.

Citigroup is among the frontrunners to lead the IPO since it had helped Aakash prepare for a stock-market debut in India a few years ago. The plans were shelved and Blackstone Inc. came on as an investor instead. The conversations with bankers were earlier reported by TechCrunch.

Aakash’s annual revenue is set to double in the current year ending in March 2023 and its operating margin is about 20%. The strong financials make Aakash stand out among India’s recent IPOs -- high-profile but unprofitable tech companies Paytm, Zomato Ltd. and Policybazaar have floundered since their debuts.

Meanwhile, Byju’s has put talks over its own stock-market listing on the back burner, said one of the people, as global markets aren’t supportive of fresh technology debuts. Byju’s had been in conversations with multiple special purpose acquisition vehicles for a listing but a global economic slowdown and slumping tech stocks have stalled those plans.

A successful Aakash listing could encourage Byju’s to do IPOs for other recent acquisitions too, and higher-education platform Great Learning could be considered next though it’s much smaller in size, one of the people said.

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