Pai may put $50-60 mn more to grow Byju’s Aakash

Ranjan Pai, chairman of Manipal Education and Medical Group, who is now the largest shareholder in Byju’s-owned Aakash is likely to invest another $50-60 million over a period of time in the brick-and-mortar coaching network company, a person aware of the matter said.

A new tranche of capital infusion is likely sooner for Aakash ahead of key student enrolment season, people aware of the discussions said, even as Prosus–an investor in Byju’s parent Think & Learn–had sent a legal notice to Pai over the latter’s conversion of debt into equity in Aakash.

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The notice may not lead to any material impact but underscores the dissent among Byju’s investors even though the board of Aakash approved the transaction. The notice, sources said, was sent before the board approved Pai’s conversion leading him to cornering a 40% stake in what’s considered the crown jewel of Byju’s.

“Pai is planning to make additional investments in Aakash for the business to grow and expand. Everyone was waiting for a long time for the conversion but nothing was moving and if anything time is critical for Byju’s and its group companies,” a person aware of the matter said.

Top sources aware of operations at Aakash also said the coaching unit will require additional investment from Pai for it to be able to run operations and scale the business during the next few months when students enroll in these centre.

“The business is actually growing fine. The upcoming season is crucial. We have seen how this business can grow more than 10-15% annually and with good Ebitda margins,” a person involved in the operations said.

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Pai declined to comment.

Sources said while a legal notice was sent by Prosus to Pai, both parties have been in discussions and the issue is unlikely to become a shareholder tussle over valuation of Aakash.

Class of 24 in Aakash_Jan 2024_Graphic_ETTECH

ET first reported on January 25saying Pai’s conversion of debt valued the offline coaching network at about $700 million–down from $950 million when Byju’s acquired it in 2021.

Pai in total has invested around $300 million in the company. He first invested close to $200 million in Aakash Institute in November last year to help Byju’s clear its debt and interest to US’ Davidson Kempner. Raveendran, the edtech major’s founder, had also borrowed capital from the investor to run daily operations at Think & Learn by pledging his personal stake in Aakash.

Pai will also get additional seats on the board of Aakash after securing the antitrust regulator’s nod for the investment. This is typical for the investor, who has recently stepped up his infusions in new-age firms at attractive valuations. In online pharmacist PharmEasy, for instance, Pai holds 15% with three directorships.

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William Murphy

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