Manipal Group’s Ranjan Pai injects Rs 1,400 crore in Byju’s, settling Davidson Kempner debt in Aakash
Ranjan Pai paid Rs 1,400 crore, inclusive of interest, to fully settle the Rs 800 crore loan that Byju’s had obtained from Davidson Kempner
SUMMARY
- In August, Davidson Kempner issued a legal notice to Aakash, asserting its claim to Aakash shares pledged as collateral for the loan
- Pai is in discussions to invest up to $300 million (about Rs 2,500 crore at current exchange rates) in Byju’s
- Pai is set to secure 20-25 percent stake in Aakash, while Byju’s personal stake is expected to decrease to approximately 12 percent
The family office of Manipal Education and Medical Group’s Chairman Ranjan Pai has acquired Davidson Kempner’s debt exposure in Aakash Education Services Ltd (AESL) for Rs 1,400 crore, providing substantial relief to its parent company, Byju’s, sources aware of the development said.
In a bilateral debt transaction, an entity affiliated to the family office paid out Davidson Kempner to settle the Rs 800 crore loan (plus Rs 600 of interest) that Byju’s had obtained from the lender early this year. The entity purchased all the NCDs of Davidson Kempner on NSE CBRICS platform today, sources said.
In August, the distressed debt specialist issued a legal notice to Aakash, asserting its claim to Aakash shares pledged as collateral for the loan.
The Bengaluru-based company has been embroiled in a disagreement with the Chaudhry family, the promoters of Aakash Institute, and private equity giant Blackstone Group over a previously arranged share swap agreement. Blackstone and the Chaudhrys refused to trade their stakes in Aakash for shares in Byju’s, citing clauses in the original share purchase agreement.
Byju’s acquired Aakash, which offers students test preparatory coaching services for competitive exams, for about $1 billion in April 2021. The Blackstone Group and Chaudhry family together hold 30 per cent of Aakash; Byju’s parent firm Think and Learn Private Limited owns 43 per cent, while Raveendran has 27 per cent.
Pai is currently in talks to invest up to $300 million (about Rs 2,500 crore at current exchange rates) in Byju’s, including the Rs 1,400 core that’s now directed towards settling the Davidson Kempner obligation. The remaining sum will be allocated to Think and Learn Private Limited, the parent entity of Byju’s.
When the full investment is completed, Pai is set to secure a substantial 20-25 per cent stake in Aakash, while Byju’s personal stake is expected to decrease to approximately 12 per cent.
Pai’s proprietary fund, Aarin Capital, was the first institutional investor in Byju’s back in 2013.
On the other end, Byju’s has put two of its group firms — kids-focused digital reading platform Epic and higher education platform Great Learning – on sale to raise immediate funds to meet the repayment obligations towards the term loan. As per recent reports, the company is in advanced talks to sell its Epic for about $400 million to Joffre Capital Ltd.
In September, the company presented a repayment proposal to its lenders, offering to pay back its entire term loan in less than six months. Byju’s has offered to repay $300 million of the distressed debt within three months if the amendment proposal is accepted and the remaining amount in the subsequent three months. The company hopes to gain close to a billion dollars from these divestments.
Byju’s will first divest Epic, the proceeds from which will go towards repaying the first tranche of $300 million if the amendment proposal is accepted.
With Thanks Reference to: https://www.businesstoday.in/entrepreneurship/start-up/story/manipal-groups-ranjan-pai-injects-rs-1400-crore-in-byjus-settling-davidson-kempner-debt-in-aakash-405389-2023-11-10
