Manipal Group’s Ranjan Pai To Invest Up To $300 Mn In Aakash

Ranjan Pai, the chairman of Manipal Group, is contemplating a hefty investment in Aakash Educational Services Limited (AESL), BYJU’S’ physical education division, with figures reaching up to $300 Mn.

The new figure is nearly four times as high compared to the $80 Mn which Pai was originally said to be lining up. This would also make it Pai’s biggest bet so far in India’s startup ecosystem, even as the Manipal Group chairman has recently invested in startups such as FirstCry, Bluestone and Pharmeasy, among others.

Incidentally, Pai is also said to be bringing some private equity (PE) firms to the table for the total investment, the ET reported citing sources close to the developments.

According to the report, Pai will invest $170 Mn in the first tranche, with subsequent investments down the line. The cash injection is likely to be used to pay off the debt Aakash took from Davidson Kempner.

Earlier this year, a financial agreement between Aakash and BYJU’S was inked, securing a credit line approximating $250 Mn. Yet, upon receiving a fraction of the agreed amount, roughly $96 Mn, Davidson Kempner purportedly cited a contract violation.

The two parties are currently in discussions of sorting the matter out. According to media reports from last month, BYJU’S will pay the amount it received, plus an interest of around INR 600 Cr ($96 Mn) to close the debt.

Furthermore, Ranjan Pai appears to be eyeing a more significant portion of Aakash. An overview of AESL’s shareholder distribution portrays BYJU’S parent, Think & Learn Private Limited, as the dominant stakeholder at 40%, followed by BYJU’S CEO Byju Raveendran with a 30% share. The Chaudhry family, AESL’s founders, hold an 18% stake, and the PE entity, Blackstone, possesses the residual 12%.

While reports have consistently suggested that there are alleged disagreements between the Chaudhry family and BYJU’S over the share swap deal announced two years ago, sources close to the edtech giant have denied anything of the sort.

BYJU’S, which has been engulfed in controversy over the past 12 months or so, is close to wrapping up a few important matters. The edtech giant is actively looking to sell two of its US-based subsidiaries, Great Learning and Epic, to raise up to $1 Bn in cash which it would deploy to repay its debts, including the $1.2 Bn term loan B.

In a statement on Wednesday, risk and financial advisory solutions provider Kroll said it has been appointed by BYJU’S term loan B lenders to ‘safeguard’ the charged assets of Great Learning.

The Bengaluru-based edtech had also issued a notice to investors and the board, saying it will present the audited financials for FY22 – to the board, advisory council as well as key investors Peak XV Partners and Prosus – by the second week of October.

Concurrently, BYJU’S has initiated further staff reductions, which could potentially affect over 4,000 employees.