Introduction
Ranjan Pai, Chairman of Manipal Education and Medical Group (MEMG), has emerged as the primary stakeholder in Byju’s Aakash Education Services Ltd, acquiring approximately 40% for Rs 2,495 crore ($300 million). This strategic move places Aakash’s valuation in the range of $750-800 million, slightly below its previous $1 billion deal with Byju’s.
Debt-Free Status and Board Approval
By converting Pai’s $300 million investment from 2023 into equity, Aakash Institute achieves a valuation of around $700 million, rendering it debt-free. The board’s approval underscores the significance of this development for Byju Raveendran’s edutech group.
Pai’s Role in Debt Clearance
Pai’s prior investment of nearly $200 million in Aakash Institute in November 2023 played a pivotal role in aiding Byju’s in clearing its debt and interest to Davidson Kempner, a US-based firm.
Consolidated Ownership Structure
Post these transactions, Pai, Raveendran, and Think & Learn collectively hold 80-82% of Aakash, while Blackstone and Aakash promoters retain the remaining 18%. Observers note that Pai functions as a “white knight” for Byju’s, offering support amid ongoing challenges.
Anticipated Board Seats and Regulatory Approval
Pai is poised to secure additional seats on Aakash Institute’s board following regulatory approval. This aligns with his recent trend of increased investments in new-age firms.
Financial Performance and Stakeholder Outlook
Aakash reported a 40% revenue increase to ₹1,491 crore in FY22, with a profit of approximately ₹80 crore. The fate of Blackstone’s and Chaudhry’s stakes, along with Aakash Chaudhry’s potential return as CEO, remains uncertain.
Byju’s Financial Landscape
Facing financial challenges, Byju’s contemplates a rights issue at a valuation ranging from $500 million to $1 billion. Recent markdowns by investors BlackRock and Prosus suggest a significant drop from its peak valuation of $22 billion three years ago.
Conclusion
Ranjan Pai’s substantial stake acquisition in Aakash strengthens Byju’s financial standing and strategic positioning in the edutech sector, marking a crucial phase in its trajectory.
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