The Byju-owned Aakash Institute is set to witness Ranjan Pai, Chairman of the Manipal Education and Medical Group (MEMG), emerge as its largest shareholder with a 40 per cent stake, according to an Economic Times report citing sources.
The Aakash board has given the nod to the conversion of the $300 million investment made by Pai in 2023 into equity. This move values the company at around $700 million, making it debt-free – a significant development for Byju Raveendran’s edutech group.
Aakash Institute, Pai and Raveendran did not respond to queries, according to the report.
Read also | Saving edtech company Byju’s: Inside the big saving action
Strategic Acquisition
Think & Learn, the parent company of Byju, acquired Aakash Institute for $950 million in 2021, marking one of the largest acquisitions in the Indian internet sector.
Notably, Pai having invested close to $200 million in Aakash Institute in November 2023, played a crucial role in helping Byju release its debt and interest to Davidson Kempner, an American company.
With the recent developments, Pai, Raveendran and Think & Learn will collectively hold 80-82 percent of Aakash, while Blackstone and Aakash promoters will retain the remaining 18 percent. Observers told the paper that “Pai is a white knight for Byju’s” amid its ongoing challenges.
Read also | No rosy picture as Byju finally presents its FY22 earnings
Antitrust Nod and Board Seats
Pai is expected to secure additional seats on the board of Aakash Institute after getting the antitrust regulator’s approval for his investment. This is consistent with his recent pattern of increased investments in new-age firms.
Aakash reported a 40 percent increase in revenue to ₹1,491 crore in FY22, with a profit of close to ₹80 crores. The fate of the interests of Blackstone and Chaudhry, along with the possible return of Aakash Chaudhry as CEO, is still to be clarified.
Byju’s, facing financial challenges, is said to be considering a rights issue at a valuation between $500 million to $1 billion. Recent downgrades from investors BlackRock and Prosus indicate a significant drop from its peak valuation of $22 billion three years ago.
Read also | Byju is likely to slash its valuation by 90% to raise fresh funds
Byju’s consolidated loss for FY22 was ₹8,245 crore on operating income of ₹5,014 crores. Audited financials for FY23 are pending.
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Published: 25 Jan 2024, 09:53 IST