Ranjan Pai May Infuse Up To $60 Mn More Into Aakash Amid Valuation Tussle

Amid the ongoing tussle between the chairman of the Manipal Education and Medical Group (MEMG), Ranjan Pai, and the shareholders of BYJU’S and its subsidiary Aakash, the former is likely to infuse another $50-60 Mn over a period of time into the beleaguered edtech giant’s test prep unit of which he is now the largest shareholder.

This comes a day after the existing shareholders objected to the Aakash Institute’s board nod for the conversion of $300 Mn investment made by Pai last year into equity, flagging concern that it would dilute the value of their stakes.

A new tranche of capital infusion is likely sooner for Aakash ahead of key student enrolment season, ET reported, citing people close to the matter, even as Prosus–an investor in Byju’s parent Think & Learn–had sent a legal notice to Pai over the latter’s conversion of debt into equity in Aakash.

The notice was sent before the board approved Pai’s conversion leading him to cornering a 40% stake in what’s considered the crown jewel of Byju’s, the report added.

“Pai is planning to make additional investments in Aakash for the business to grow and expand. Everyone was waiting for a long time for the conversion but nothing was moving and if anything time is critical for Byju’s and its group companies,” a person mentioned above said.

Pai will also get additional seats on the board of Aakash after securing the antitrust regulator’s nod for the investment. This is typical for the investor, who has recently stepped up his infusions in new-age firms at attractive valuations. In online pharmacist PharmEasy, for instance, Pai holds 15% with three directorships.

Pai has invested a total of close to $300 Mn in the company. He first invested nearly $200 Mn in Aakash Institute in November last year to help Byju’s clear its debt and interest to US’ Davidson Kempner. Raveendran, the edtech major’s founder, had also borrowed capital from the investor to run daily operations at its parent entity Think & Learn by pledging his personal stake in Aakash.

BYJU’S consolidated net loss crossed the INR 8,000 Cr, or about $1 Bn, mark in the financial year ended March 31, 2022. Its operating revenue rose over 120% year-on-year to INR 5,014.6 Cr during the year under review, mostly on the back of improvement in the financial performance of Aakash.

Aakash saw its profit widen by 82% to INR 79.5 Cr in FY22, and saw its revenue increase by 45% to INR 1,421.2 Cr from INR 982.7 Cr in FY21.

Meanwhile, Pai is increasingly becoming an active investor in Indian startups. The Manipal Group chairman invested in startups such as FirstCry, Bluestone and Pharmeasy, among others, last year.