Manipal Education and Medical Group chairman Ranjan Pai has made a $168 million (Rs 1,400 crore) investment in the struggling edtech firm Byju’s’ test-prep subsidiary Aakash Educational Services Limited (AESL). This investment will assist Byju’s in repaying the loan it raised from US-based investment firm Davidson Kempner Capital Management in May, following a ‘technical default’, according to sources familiar with the situation.
As previously reported by Business Standard, Pai is in talks to invest approximately $350 million in equity and debt in Byju’s, according to sources.
“The family office of Ranjan Pai has taken over Davidson Kempner’s debt exposure in AESL,” said a person knowledgeable about the development. “He is collaborating with primary shareholder Byju’s and its founder Byju Raveendran to lead the tutorial chain forward.”
In May 2023, Byju’s signed a Rs 2,000 crore ($250 million) round from Davidson Kempner in a structured instruments deal. Following an alleged breach of the loan covenant triggered by the lender, the company only received around Rs 800 crore out of the total amount. Talks to return the money began at the end of June, and negotiations to settle the dispute commenced between Byju’s and Davidson Kempner.
Additionally, the legal battle between Byju’s and lenders in the US on the edtech firm’s $1.2-billion term loan B (TLB), along with the company skipping an interest payment of $40 million on the loan, made the other investor Davidson Kempner “extremely concerned,” according to sources familiar with the matter.
Byju’s is paying approximately Rs 1,400 crore to Davidson Kempner, with approximately Rs 800 crore being the loan amount and the remaining Rs 600 crore in interest, according to sources.
Industry sources stated that Pai of Manipal Group resolved the debt transaction with Davidson Kempner in a bilateral manner. An entity of Pai purchased all the non-convertible debentures (NCDs) of Davidson Kempner on the NSE Corporate Bond Reporting and Integrated Clearing System (CBRICS) platform.
Byju’s declined to comment on this development. Analysts noted that the loan dispute with Davidson Kempner was a corporate hangover on AESL, and its resolution, along with Pai’s entry, signifies significant milestones for Byju’s parent company Think and Learn.
They said this would assist the firm in navigating the business restructuring it has initiated amid a challenging macro funding environment. Byju’s is in the midst of a restructuring exercise led by its recently appointed India business chief executive officer, Arjun Mohan.
The company plans to lay off approximately 4,000 employees, representing over 11 per cent of its workforce.
Earlier in the year, the company laid off about 1,000 employees as part of an ‘optimization’ strategy, followed by subsequent rounds of layoffs impacting hundreds more.