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Months after taking a large stake in Byju’s owned Aakash Educational Services, Ranjan Pai, chairman of Manipal Education and Medical Group is readying to take a larger stake in Aakash.
According to several highly placed sources, Pai is eyeing at 42 per cent stake collectively held by Byju Raveendran and Think and Learn (see chart). Think and Learn is the holding company of Byju’s. Apparently, Pai has offered to acquire the stake at a valuation of $700 – 800 million, which is at a slight premium to the valuations at which Pai acquired stake in Aakash earlier this year.
Easier option
For cash-strapped Byju’s tangled in multiple lawsuits, selling stakes to Pai could offer respite to its sinking financials. In September last year, Byju’s had put two of its subsidiaries – Epic and Great Learning, on the block. “There hasn’t been any firm interest on these assets so far and the transactions are hanging by the hook with no progress,” said a person familiar with the matter.
With Aakash being the jewel crown for Byju’s, encashing stake in the company could be an easier option, fetching better valuations vis-à-vis other businesses.
However, a spokesperson for Byju’s, when contacted over an email, said, “There is no such conversation taking place between Think and Learn and Manipal Education Group.”
Nonetheless, sources say the deal would be a win-win for Byju’s and Pai.
All or nothing
Meanwhile, expanding stake to 82 per cent would strengthen Pai’s position in Aakash’s board. “Right now, the vetoing power is still with Byju’s and that goes against Pai’s style of operating. He would like to have everything or nothing when it comes to board decisions,” said another highly placed source.
It is also learnt that if Pai’s offer to Raveendran and Think and Learn is turned down, he may want to exit Aakash at a valuation of $600 million. “This is approximately the price at which Pai entered Aakash and his decision has been communicated to the board and Raveendran,” said a source quoted earlier.
Further with the Chaudhry family, erstwhile Promoters of Aakash backing off from the share-swap deal which would have given them commensurate stake in Think and Learn and was part of the original share purchase agreement, it needs to be seen how they would continue to hold interest in Aakash.
In November 2022, Ranjan Pai invested about $200 million in Aakash to help Byju’s clear its loan outstanding to Davidson Kempner and is said to have has invested around $300 million so far in Aakash including the equity conversion that concluded last year.
Recently, a group of investors in Byju’s parent Think & Learn (T&L) unanimously voted to remove founder Byju Raveendran at the EGM held on February 23. The Karnataka High Court extended the interim order asking the shareholders not to bring in effect any resolutions passed by investors at EGM.
In FY22, Byju’s reported net loss of ₹8,245 crore as against ₹4,564 crore of loss in FY21.
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