Aakash Institute debt to go off with Ranjan Pai owning 40%

Ranjan Pai, the chairman of Manipal Education and Medical Group, is set to potentially become the majority shareholder in Aakash Institute, owned by Byju’s, with a 40% stake, reports The Economic Times (ET).

The Aakash board has reportedly approved converting Pai’s $300 million investment in 2023 into equity, valuing Aakash Institute at approximately $700 million and positioning it as a debt-free entity.

Aakash Education Services Ltd (AESL), specializing in coaching for medical and engineering students, was acquired by Byju’s parent company, Think & Learn, for $950 million in 2021, marking one of the most significant acquisitions in the Indian startup ecosystem at that time.

Ranjan Pai’s proprietary fund, Aarin Capital, was Byju’s first institutional investor in 2013. The acquisition of Aakash Institute in April 2021 was valued at around $1 billion.

Blackstone Group and the Chaudhry family collectively hold 30% of Aakash Institute, Byju’s parent firm Think and Learn retains 43%, and Byju Raveendran holds a 27% stake.

In November 2023, Ranjan Pai acquired Davidson Kempner’s debt exposure in AESL for Rs 1,400 crore, providing significant relief to Byju’s, which faced legal and financial challenges, including a $1.2 billion term loan B.

As part of the transaction, Pai was reportedly in discussions to invest up to $300 million, with Rs 1,400 crore directed towards settling the Davidson Kempner obligation.

The residual funds were allocated to Think and Learn Private Limited, the parent company of Byju. Upon completing the total investment, Ranjan Pai was expected to secure a substantial 20-25% stake in Aakash Institute, reducing Byju’s stake in AESL to around 12%.

The latest report by ET suggests that Pai’s stake in the firm may be nearly twice as high as initially expected. Aakash Institute has yet to confirm these reports officially.

Source: Business Standard