Ranjan Pai to own 40% in Byju's Aakash Institute, make it debt-free

Aakash Institute's board has approved the conversion of Ranjan Pai's $300 million investment, making him the principal shareholder and rendering the company debt-free

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Ranjan Pai, the chairman of Manipal Education and Medical Group, may emerge as the majority shareholder in Aakash Institute, owned by Byju's, with 40 per cent stake, according to a report by The Economic Times (ET). The Aakash board has reportedly given the green light for the conversion of Ranjan Pai's $300 million investment made during 2023 into equity. This move values Aakash Institute, one of Byju Raveendran's key assets amid challenges in the edtech sector, at approximately $700 million and would position it as a debt-free entity.

Aakash Education Services Ltd (AESL), a coaching centre for medical and engineering students, was acquired by Byju's parent company, Think & Learn, for $950 million in 2021. At the time, it was one of the largest acquisitions in the Indian startup ecosystem.

Aarin Capital, Ranjan Pai's proprietary fund, was the first institutional investor in Byju's back in 2013. The acquisition of Aakash Institute by Byju's in April 2021 was valued at about $1 billion. Currently, the Blackstone Group and Chaudhry family (founders of AESL) collectively hold 30 per cent of Aakash Institute, while Byju's parent firm Think and Learn retains 43 per cent, and Byju Raveendran holds a 27 per cent stake.

In November 2023, Ranjan Pai acquired Davidson Kempner's debt exposure in AESL for Rs 1,400 crore. This provided significant relief to Byju's, which has been grappling with legal and financial woes including a term loan B of $1.2 billion.

As part of the same transaction, Pai was also reported to be in discussions to invest up to $300 million (around Rs 2,500 crore), including the Rs 1,400 crore directed towards settling the Davidson Kempner obligation. The remaining funds were earmarked for Think and Learn Private Limited, Byju's parent entity. Upon completing the full investment, Ranjan Pai was anticipated to secure a substantial 20-25 per cent stake in Aakash Institute. This would also reduce Byju's personal stake in AESL to approximately 12 per cent.

The latest report by ET suggests that Pai's stake in the firm may be nearly twice as high as this earlier expectation. Aakash Institute has yet to officially confirm these reports.