Ranjan Pai, Ranjan Pai, Health Billionaire Puts 170 Million in Edtech Firm’s Test Prep Center Byju.
Ranjan Pai, chairman of Manipal Education and Medical Group.
Indian billionaire Ranjan Pai, who netted nearly $1 billion from selling a portion of his stake in hospital Manipal Health Enterprises to Singapore’s Temasek, has recently placed a contrarian bet. On Friday, Pai agreed to invest $170 million in Aakash Educational Services, the offline assessment assistance arm of veteran edtech firm Byju’s.
The investment, which will be made through the Pai family office, will allow Byju’s to repay a loan of the same amount taken from the global investment management firm Davidson Kempner. The founder of Byju Byju Raveendran had pledged a large number of his shares from his 27% stake in Aakash and Davidson Kempner to get the loan and those pledged shares will be transferred to the family office.
Pai-who has a net worth of $2.8 billion, according to Forbes‘ Real-time tracker – is also believed to be in talks to buy another and as-yet-unknown share in Aakash. Pai’s bailout will end the legal dispute between Byju and Davidson Kempner. As part of a formal credit agreement signed in May, Byju’s was granted a $245 million loan by the investment agency. Byju’s had received only 8 billion rupees ($98 million) as part of the settlement when it allegedly breached the deal and defaulted on the debt. This led to a legal battle that has since been resolved. Neither Byju’s nor Aakash has released any official statement regarding this; Byju’s did not respond to a request for comment.
Industry observers say Pai’s payment puts Aakash on a clear path to growth without running into Byju’s troubles. Think & Learn, the parent company of Byju’s, bought Aakash for $950 million in 2021 with 70% cash and 30% equity from the startup’s founder Aakash Chaudhry, who is currently expected to return as CEO. Chaudhry’s family owns 18% stake in Aakash while global private equity firm Blackstone owns 12% stake.
Aakash was preparing for an IPO in 2024 but now it is thought that it could be sold to solve Byju’s many problems, which range from dilution to losses.
In early November, Byju’s finally released its long-awaited financial results for fiscal 2022, which excludes Aakash. Revenue more than doubled to 35.7 billion rupees while its loss fell to 22.5 billion rupees from 24 billion rupees in fiscal 2022.
Pai’s investment in Aakash is in line with his mission (as revealed in an interview with Forbes Asia earlier this year) to use at least part of his money as a “trust fund” to revive the struggling startup. He had said: “There is no point in investing a lot of money to start new processes. We need to support existing startups.”
Byju’s was once considered one of the most valuable edtech companies in the world with a valuation of $22 billion as of March 2022. The education outfit’s valuation has dropped to $5.1 billion after for the Netherlands-based investment group Prosus, formerly Naspers, to underwrite their stake. by 77% in June.
Pai has not bet blindly. He was the first parent investor of Byju Think & Learn when he bought a 26% stake for $8 million in 2012 through Aarin Capital, the venture capital firm he co-owns with Mohandas Pai (no relation). , who was the IT chief financial officer. Infosys is big. Aarin made a huge profit when it sold most of its shares in 2015 before fully exiting in 2021, shortly before the edtech firm was hit by a series of problems.
“It’s good for someone who knows the company from the early days to come in, but do it on a broader scale by investing in Aakash and not the parent,” says Arun Natarajan, founder of data and analytics provider Chennai Venture . Wisdom. “This is a strong signal and will be watched closely.”
Meanwhile, Raveendran, a math entrepreneur turned edtech, is reportedly trying to raise more money by selling digital reading platform Epic that Byju’s acquired in July 2021 for $400 million.
This effort is made at a difficult time. More than 2,400 Indian startups have closed shop in calendar 2022, double the number from last year, according to Tracxn, a Bangalore-based startup data platform.
Undeterred, Pai continues to farm with floundering startups. He is now the largest shareholder, with a 15% stake, in troubled Mumbai-based online drug retailer PharmEasy, which he acquired in a rights issue last month at a discount of Rs. 90% to its peak of $5.6 billion in 2021. He has also taken small. stakes in omnichannel jewelry retailer Bluestone and beauty products retailer Purplle.
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