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Ranjan Pai Picks 40% Stake In Byju's-Owned Aakash Institute, Becomes Its Biggest Shareholder

Aakash Institute's board approved converting Pai's $300 million investment in 2023 into equity

Ranjan Pai Picks 40% Stake In Byju's-Owned Aakash Institute, Becomes Its Biggest Shareholder
POSTED ON January 25, 2024 9:44 PM

Ranjan Pai, chairman of the Manipal Education and Medical Group (MEMG), is set to become the largest shareholder in Aakash Institute, owned by Byju's, with a 40 percent stake purchase. According to sources cited in a report by the Economic Times, the Aakash board has approved the conversion of his $300 million investment from 2023 into equity, valuing the company at approximately $700 million and thereby making it debt-free. 

With these 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 suggest that Pai is acting as a "white knight" for Byju's amid its ongoing challenges.

Following approval from the antitrust regulator for his investment, Pai is expected to secure additional seats on the board of Aakash Institute, aligning with his recent pattern of increased investments in new-age firms. 

Byju Raveendran's eponymous edtech unicorn acquired Aakash Institute for $950 million in 2021.

Pai invested nearly $200 million in Aakash Institute in November 2023, which helped Byju's clear its debt and interest to US-based Davidson Kempner. 

Aakash Institute reported a 40 percent increase in revenue to ₹1,491 crore in FY22, with a profit of close to ₹80 crore. The fate of Blackstone's and Chaudhry's stakes, along with Aakash Chaudhry's potential return as CEO, is yet to be clarified.

Byju's, facing financial challenges, is reportedly considering a rights issue at a valuation between $500 million to $1 billion. Recent markdowns by investors BlackRock and Prosus indicate a significant drop from its peak valuation of $22 billion three years ago. 

The edtech unicorn's consolidated loss for FY22 stood at Rs 8,245 crore with an operating revenue of Rs 5,014 crore. The audited financials for FY23 are still pending.

In an effort to alleviate its financial problems, Byju's is reportedly looking to raise funds at a discount of more than 90 per cent from its previous round. The company plans to conduct a share sale next month, asking for more than $100 million from existing investors. 

This would value the firm at less than $2 billion, down from $22 billion in its previous round in late 2022. Founder Byju Raveendran will participate in the share sale to retain his stake, and the proceeds will be used to pay off vendors and stabilize the business.

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