Ranjan Pai, the chairman of Manipal Education and Medical Group, has bought a 40% stake in Aakash Institute, one of the largest test-prep businesses in India, owned by edtech giant Byju’s. The Aakash board has approved the conversion of Pai’s $300 million investment, made during 2023, into equity, valuing the company at around $700 million and making it debt-free .
Aakash Institute: A key asset for Byju’s
Aakash Institute provides coaching and study material for medical and engineering entrance exams, such as NEET and IIT-JEE, for undergraduate students. It also offers classes for Olympiad and NTSE and basic classroom curriculum. Byju’s acquired Aakash Education Services Ltd (AESL) for $950 million in 2021, in one of the largest deals in the Indian startup ecosystem . The acquisition was part of Byju’s aggressive expansion strategy through mergers and acquisitions.
However, Byju’s has been facing several challenges in the edtech sector, such as regulatory hurdles, legal disputes, valuation cuts and debt obligations. In November 2023, Pai acquired Davidson Kempner’s debt exposure in AESL for Rs 1,400 crore, providing significant relief to Byju’s, which had 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.
Ranjan Pai: A long-term partner for Byju’s
Ranjan Pai is not a new investor in Byju’s. His proprietary fund, Aarin Capital, was the first institutional investor in Byju’s back in 2013. Pai has been closely involved with Byju Raveendran, the founder and CEO of Byju’s, in sorting out the debt issue and other matters too. Pai is also the chairman of Manipal Education and Medical Group, which runs Manipal University and several hospitals across India.
With his latest investment, Pai will become the principal shareholder in Aakash Institute, holding 40% stake. The remaining shareholders include the Blackstone Group and Chaudhry family (founders of AESL) with 30%, Think and Learn (Byju’s parent company) with 43%, and Byju Raveendran with 27%. This will also reduce Byju’s personal stake in AESL to around 12%.
Pai’s stake in Aakash Institute may be crucial for both Aakash and Byju’s, as they face increasing competition and regulatory uncertainty in the edtech space. Aakash Institute has reported an 82% surge in its total profit to Rs 79.5 crore for FY2022. Its operating revenue during the period grew 45% to Rs 1,421 crore. Pai may bring his expertise and experience to help Aakash grow further and leverage its synergies with Byju’s.