In a strategic move, Ranjan Pai, the chairman of Manipal Education and Medical Group (MEMG), is poised to secure a significant 40% stake in Aakash Institute, owned by Byju's, according to sources familiar with the matter. The Aakash board has given the green light to convert Ranjan Pai's $300 million investment in 2023 into equity, valuing the institute at approximately $700 million and relieving it of debt.
According to a report of ET, Byju's parent company, Think & Learn, had acquired the offline coaching chain in 2021 for a substantial $950 million, marking one of the largest acquisitions in the Indian internet sector. The latest development positions Ranjan Pai as a key figure in the fate of Aakash Institute as Byju's navigates through various challenges, including governance issues.
Pai's increased involvement stems from his additional investment of nearly $200 million in November last year, aimed at helping Byju's clear its debts, especially to US-based Davidson Kempner. The move renders Pai, Byju Raveendran, and Think & Learn collectively holding 80-82% of Aakash Institute, while private equity firm Blackstone and Aakash promoters, the Chaudhrys, retain the remaining 18%.
"Pai is a white knight for Byju’s," noted an insider, emphasizing the critical role Pai plays in supporting Byju's during its challenging phase. Following regulatory approval, Pai is set to secure additional seats on the Aakash Institute board.
Ranjan Pai, known for his recent investments in new-age firms like PharmEasy, FirstCry, and BlueStone, has been actively diversifying his portfolio after partially cashing out of Manipal Hospitals in April 2023. Meanwhile, negotiations regarding Blackstone's and Chaudhrys' stakes in Aakash Institute are ongoing, with discussions about their stock swap in Think & Learn still pending.
Aakash Institute, founded over 35 years ago, reported a notable 40% increase in revenue to Rs 1,491 crore in FY22, accompanied by a profit close to Rs 80 crore. FY23 results are currently pending. Aakash Chaudhry, contemplating a return as chief executive, adds an interesting dimension to the evolving dynamics of this strategic development.