Ranjan Pai may set the tone in all further decision-making at Byju’s coaching arm Aakash Institute, having emerged a white knight in the internecine battle at the edtech firm, people in the know said.Byju’s investors are reconciled to his acquisition of 40% in Aakash, the people said, adding that the Manipal Education and Medical Group chairman has also invested an additional Rs 250 crore as working capital and to pay salaries.
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Investors in the edtech group’s parent, Think & Learn, have held discussions with Pai after a legal notice was issued to him by a top investor, Prosus, over conversion of $250-300 million (Rs 2,072-2,486 crore) debt into equity at Aakash.
The coaching chain is the only profit centre with Byju’s now. All of Pai’s investments are in Aakash Institute, none in Think & Learn.
“It’s clear Pai has put in a significant amount of personal capital, and (Byju’s investors) are increasingly aligning with him being involved in all key strategic decision-making at Aakash,” one person said. “All investors were informed before the conversion, which was also clear during the payout of the Davidson Kempner loan.”
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Pai declined to comment on talks with investors or his latest cash infusion in Aakash.
Also read | Ranjan Pai cuts Rs 1,400 crore cheque for Davidson Kempner debt, books Aakash seats
Byju’s had signed a Rs 2,000-crore credit facility with Davidson Kempner — linked to Aakash’s cash flow. However, with only Rs 800 crore advanced, the New York lender sought repayment citing breach of terms. Pai had then stepped in to clear the debt, as well as outstanding interest, with a cheque for Rs 1,400 crore.
Pai’s team had alerted Byju’s investors to the debt conversion and its approval by Aakash’s board. “(They) were given at least two deadlines but there was no formal opposition (from them),” said one person mentioned above.
“Pai’s team even informally mentioned that if any shareholders have an issue with him getting a large stake, his investment in Aakash could be bought out,” this person said, adding that the stake conversion is legally air-tight and that the investor has approached the Competition Commission of India for approval.
ET reported on January 30 that Pai would have to infuse additional capital to stabilise operations at the brick-and-mortar coaching business ahead of enrolment season.
Group founder Byju Raveendran, Think & Learn, Blackstone and Aakash promoters, the Chaudhrys, are the other shareholders in Aakash.
Also read | Ranjan Pai has a ‘Powar’ plan for family office Claypond Capital
Value erosion
A major trigger for the investor dispute was the debt conversion valuing the coaching firm at $600-700 million, against its acquisition for $950 million by Think & Learn in 2021.
A bulk of Byju’s other acquisitions have also seen steep value erosion. Its buyout of Whitehat Jr in 2020 for $300 million has been a major blot, accounting for nearly half of the startup’s losses in fiscal 2022.
Additionally, Byju’s is raising $200 million in a rights issue at 99% discount to its peak valuation of $22 billion. This capital is crucial to clear liabilities and sustain operations, even after the company has reduced operating expenses over the past year, including by firing thousands of employees.
After a possible majority grouping of investors on Friday voted to remove Raveendran from the helm of Byju’s, as well as augment the board, Raveendran held a board meeting on Saturday, terming their extraordinary general meeting illegal.
However, there can be no implementation of any decision before March 13, when the Karnataka High Court hears the edtech startup’s petition against the investor group.
The National Company Law Tribunal (NCLT) has also received a petition from four investors of Byju’s, led by Prosus, over the contentious rights issue and lack of corporate governance by Raveendran and the board.
Byju’s plans to sell group assets such as Epic and Great Learning have also hit a roadblock, with the current investor battle. Its term loan B investors have been seeking repayment of the $1.2 billion it took in November 2021. Lenders have also filed for insolvency proceedings against Byju’s in India and in the US.
Ranjan Pai may set the tone in all further decision-making at Byju’s coaching arm Aakash Institute, having emerged a white knight in the internecine battle at the edtech firm, people in the know said.Byju’s investors are reconciled to his acquisition of 40% in Aakash, the people said, adding that the Manipal Education and Medical Group chairman has also invested an additional Rs 250 crore as working capital and to pay salaries.
Elevate Your Tech Prowess with High-Value Skill Courses
Investors in the edtech group’s parent, Think & Learn, have held discussions with Pai after a legal notice was issued to him by a top investor, Prosus, over conversion of $250-300 million (Rs 2,072-2,486 crore) debt into equity at Aakash.
The coaching chain is the only profit centre with Byju’s now. All of Pai’s investments are in Aakash Institute, none in Think & Learn.
“It’s clear Pai has put in a significant amount of personal capital, and (Byju’s investors) are increasingly aligning with him being involved in all key strategic decision-making at Aakash,” one person said. “All investors were informed before the conversion, which was also clear during the payout of the Davidson Kempner loan.”
Discover the stories of your interest
Pai declined to comment on talks with investors or his latest cash infusion in Aakash.
Also read | Ranjan Pai cuts Rs 1,400 crore cheque for Davidson Kempner debt, books Aakash seats
Byju’s had signed a Rs 2,000-crore credit facility with Davidson Kempner — linked to Aakash’s cash flow. However, with only Rs 800 crore advanced, the New York lender sought repayment citing breach of terms. Pai had then stepped in to clear the debt, as well as outstanding interest, with a cheque for Rs 1,400 crore.
Pai’s team had alerted Byju’s investors to the debt conversion and its approval by Aakash’s board. “(They) were given at least two deadlines but there was no formal opposition (from them),” said one person mentioned above.
“Pai’s team even informally mentioned that if any shareholders have an issue with him getting a large stake, his investment in Aakash could be bought out,” this person said, adding that the stake conversion is legally air-tight and that the investor has approached the Competition Commission of India for approval.
ET reported on January 30 that Pai would have to infuse additional capital to stabilise operations at the brick-and-mortar coaching business ahead of enrolment season.
Group founder Byju Raveendran, Think & Learn, Blackstone and Aakash promoters, the Chaudhrys, are the other shareholders in Aakash.
Also read | Ranjan Pai has a ‘Powar’ plan for family office Claypond Capital
Value erosion
A major trigger for the investor dispute was the debt conversion valuing the coaching firm at $600-700 million, against its acquisition for $950 million by Think & Learn in 2021.
A bulk of Byju’s other acquisitions have also seen steep value erosion. Its buyout of Whitehat Jr in 2020 for $300 million has been a major blot, accounting for nearly half of the startup’s losses in fiscal 2022.
Additionally, Byju’s is raising $200 million in a rights issue at 99% discount to its peak valuation of $22 billion. This capital is crucial to clear liabilities and sustain operations, even after the company has reduced operating expenses over the past year, including by firing thousands of employees.
After a possible majority grouping of investors on Friday voted to remove Raveendran from the helm of Byju’s, as well as augment the board, Raveendran held a board meeting on Saturday, terming their extraordinary general meeting illegal.
However, there can be no implementation of any decision before March 13, when the Karnataka High Court hears the edtech startup’s petition against the investor group.
The National Company Law Tribunal (NCLT) has also received a petition from four investors of Byju’s, led by Prosus, over the contentious rights issue and lack of corporate governance by Raveendran and the board.
Byju’s plans to sell group assets such as Epic and Great Learning have also hit a roadblock, with the current investor battle. Its term loan B investors have been seeking repayment of the $1.2 billion it took in November 2021. Lenders have also filed for insolvency proceedings against Byju’s in India and in the US.
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