Manipal Group Rescues Byju’s with Rs 1,400 Crore Injection

In a pivotal move, the family office of Ranjan Pai, Chairman of Manipal Education and Medical Group, has infused Rs 1,400 crore into Byju’s, effectively resolving the looming debt issue associated with Davidson Kempner in Aakash Education Services Ltd (AESL). This strategic transaction involves the payment of Rs 800 crore loan, inclusive of Rs 600 crore interest, originally procured by Byju’s from Davidson Kempner earlier this year.

The debt settlement, executed through the acquisition of all Non-Convertible Debentures (NCDs) of Davidson Kempner on the NSE CBRICS platform, marks a significant relief for Byju’s. The distressed debt specialist, Davidson Kempner, had issued a legal notice in August, asserting its claim to Aakash shares pledged as collateral for the loan.

Byju’s, a Bengaluru-based educational technology firm, had acquired Aakash Education Services Ltd for approximately $1 billion in April 2021. However, subsequent disputes emerged with the Chaudhry family, promoters of Aakash Institute, and private equity giant Blackstone Group over a share swap agreement. Blackstone and the Chaudhrys declined to trade their stakes in Aakash for shares in Byju’s, citing clauses in the original share purchase agreement.

Ranjan Pai, through his family office, is now in discussions to invest up to $300 million (about Rs 2,500 crore) in Byju’s. This capital injection includes the Rs 1,400 crore directed towards settling the Davidson Kempner obligation. The remaining funds will be allocated to Think and Learn Private Limited, the parent entity of Byju’s.

Upon the completion of this investment, Ranjan Pai is poised to secure a substantial 20-25 percent stake in Aakash. Concurrently, Byju Raveendran’s personal stake in the company is anticipated to decrease to approximately 12 percent.

Aarin Capital, Pai’s proprietary fund, holds historical significance as the first institutional investor in Byju’s dating back to 2013.

To meet immediate repayment obligations towards the term loan, Byju’s is actively divesting two of its group firms – Epic, a kids-focused digital reading platform, and Great Learning, a higher education platform. Recent reports indicate that the company is in advanced talks to sell Epic for about $400 million to Joffre Capital Ltd.

In September, Byju’s presented a repayment proposal to its lenders, offering to repay the entire term loan in less than six months. The proposal entails repaying $300 million of the distressed debt within three months if accepted, with the remaining amount settled in the subsequent three months. Byju’s aims to secure close to a billion dollars from these divestments.

The initial divestment from Epic will contribute to repaying the first tranche of $300 million, contingent on the acceptance of the proposed amendments. This multifaceted approach underscores Byju’s commitment to financial stability and strategic positioning in the evolving educational technology landscape.