In a significant development for the troubled Aakash Institute, Ranjan Pai, Chairman of the Manipal Education and Medical Group (MEMG), is poised to become the largest shareholder with a 40% stake buyout. The move, approved by the Aakash board, involves the conversion of a $300 Mn investment made by Ranjan Pai in 2023 into equity. The valuation of around $700 Mn wipes out Aakash’s outstanding debt, positioning it as a crucial asset for BYJU’S.
Pai’s extensive involvement in resolving Aakash’s challenges, particularly the Davidson Kempner debt issue, adds a crucial element to the fate of BYJU’S. Last month, Pai had initially invested $168 Mn in Aakash Institute, BYJU’S’ physical education division. The current move solidifies Pai’s significant influence in shaping the future of Aakash.
Key Points:
- Strategic Stake Buyout: Ranjan Pai’s substantial investment converts into equity, making him the largest shareholder in Aakash Institute with a 40% stake.
- Debt Elimination: The valuation of around $700 Mn resulting from Pai’s investment eliminates Aakash’s outstanding debt, offering a financial lifeline to the troubled edtech entity.
- Critical Role in BYJU’S Strategy: The ‘Pai factor’ emerges as a critical element in determining the trajectory of Aakash Institute, an essential asset for BYJU’S.
- Ownership Structure: Post the transaction, Pai, along with BYJU’S Founder Byju Raveendran and Think & Learn, will collectively own 80-82% of Aakash. Private equity firm Blackstone and Aakash promoters, the Chaudhrys, will account for the remaining 18%.
- Financial Performance: BYJU’S consolidated net loss surpassed INR 8,000 Cr ($1 Bn) in the financial year ending March 31, 2022. Aakash’s positive financial performance significantly contributed to BYJU’S operating revenue, which rose over 120% YoY to INR 5,014.6 Cr.
- Active Investor: Ranjan Pai continues to establish himself as an active investor in the Indian startup ecosystem. His investments include ventures such as FirstCry, Bluestone, and Pharmeasy, showcasing a keen interest in diverse sectors.
This strategic move by Ranjan Pai not only provides financial stability to Aakash Institute but also enhances BYJU’S position amid its challenging financial landscape.
