(Bloomberg) -- 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, according to people familiar with the matter.

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Aakash Educational Services, the firm’s tutoring business provider, 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 centers to help teenagers prepare for the grueling tests that rank them for entry into coveted schools such as the Indian Institute of Technology. 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 were delayed 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.