Manipal Group’s Ranjan Pai saves Byju’s from certain collapse

Beleaguered edtech pioneer Byju’s seems to have found a white knight in Manipal Education and Medical Group’s (MEMG) Ranjan Pai, who has acquired a 40 per cent stake in Byju-owned Aakash Institute.

The Manipal Group chairman has invested around $300 million, emerging as the largest shareholder of Akash Institute and is reported to have offered to invest another $50 million in the brick-and-mortar coaching network of Buju’s, over a period of time.

The board of Aakash has approved conversion of the $300 million investment made by Pai in 2023 into equity, thereby reducing its outstanding debt.

With the conversion of Manipal Group’s investment into equity, Pai, Raveendran, and Think & Learn together own 80 to 82 per cent of Aakash, with investment firm Blackstone and Aakash promoters Chaudhrys owing the remaining 18 per cent.

Byju’s amassed a net loss topped Rs8,000 crore (nearly $1 billion) in the financial year ended 31 March 2022, even as its operating revenue rose over 120 per cent to Rs5,014.6 crore during the year, thanks to improved performance of Aakash.

Aakash’s profit widened by 82 per cent to Rs79.5 crore in FY22 while its revenue increased by 45 per cent to Rs1,421.2 crore from Rs982.7 crore in FY21.

Byju Raveendran along with wife and cofounder Divya Gokulnath, brother Riju Ravindran and others have a combined stake of around 26 per cent in Think & Learn, which runs Akash. Byju is now reported to be seeking an additional $52 million from multiple investors to finance his pro-rata investment in the company.

Think & Learn, meanwhile, is reported to be seeking investment by existing shareholders of up to $200 million. The issue could value the beleaguered startup at $20-25 million, say people close to the developments.

Byju’s which was once valued at around $52 million, is reported to be planning to offer shares at $5 apice, as the company’s valuation gets a 99 per cent knock.

Revival of Byju’s fortunes is also dependent on whether the rights issue is subscribed fully. Any dependence on external investors will result in further dilution of shareholder wealth and rejection of rights issue.