Chairman of Manipal Group, Dr. Ranjan Pai, is in discussions to invest in ed-tech Byju’s owned Aakash. Pai is expected to invest via his family office, according to a source close to the development.
This investment will be a part of the equity round that the company is raising, said the source. Byju Raveendran, who holds a 30 per cent stake in Aakash, is expected to partially offload his stake to Pai. The fund will be used to repay the ₹800 crore to investor Davidson Kempner after Byju’s had a technical default on the loan it raised in May.
Raveendran would look to release the pledge on shares of Aakash, which he had offered as collateral for the loan, the source said.
In 2011, Dr. Pai invested in Byju’s through his venture capital fund AarinCapital. Aarin had eventually exited the company over the years.
Aakash Educational Services was acquired by Byju’s for nearly $940 million in a cash and stock deal, in 2021. It was a 70:30 cash-equity deal, under which the promoters of Aakash and Blackstone will receive an undisclosed stake in Byju’s for about 30 per cent of the payment. However, the shareholders of Aakash have been reluctant to execute the share swap, citing Byju’s declining value, according to the source.
‘Much needed relief’
If the funding is successful, it will provide much-needed relief to Byju’s, which is currently grappling with various challenges. Byju’s has been actively pursuing significant fundraising since the beginning of the year, but so far, they have been unable to finalise the funding round.
Neither Byju’s nor Ranjan Pai’s office commented on the likely investment.
In May, Byju’s signed a definitive agreement with Davidson Kempner to raise $250 million in structured instruments, linked with future cash flows of Aakash Educational Services.
However, Davidson Kempner Capital Management has given out less than half of the $250 million of convertible debt it had offered as some loan agreement covenants weren’t met, according to reports.
Recently, the company has laid-off over 2,000 employees, deferring appraisals, and relinquished office spaces.