Ranjan Pai’s family office buys out Davidson Kempner’s debt in Byju’s

Mumbai: Manipal Education and Medical Group founder Ranjan Pai’s family office on Friday acquired the debt held by Davidson Kempner in Aakash Education Services Ltd for ₹1,400 crore as part of a larger deal which will also lead to private equity firm Blackstone exiting Aakash Education Services within a month, people in the know said.

Besides, Pai is also set to acquire some shares of Aakash Chaudhry, the founder of Aakash Education Services, and is on track to accumulate around 30% stake in the company for $350 million within a month.

Byju’s founder, Byju Raveendran, in his personally capacity, owned 27% stake in Aakash, and pledged a significant portion of the shares to Davidson Kempner to raise capital.

An entity of Pai’s family office bought the non-convertible debentures of Davidson on the NSE Cbrics platform on Friday, and the pledge was transferred to Pai, one of the people said.

Pai, recognized as a supporter of Raveendran, is helping him secure control over Aakash. His move comes in response to Davidson Kempner declaring a default on the loan during the last quarter, putting Raveendran’s position in jeopardy. Byju’s parent Think & Learn Pvt. Ltd secured a ₹2,000 crore loan from Davidson in May.

Davidson released the first tranche of ₹800 crore, but subsequently held back the balance, claiming Byju’s had breached the covenants, by defaulting on its $1.2 billion US term loan.

When the lenders recalled the $1.2 billion loan, Davidson Kempner also froze the loan to Think & Learn and declared a default.

The Chaudhrys initially agreed to sell Aakash to Byju’s in January 2021 for over $950 million in cash and shares. While the cash component was settled, the share swap didn’t materialize for two years.

In part, due to the parent’s struggles with lenders, auditors, and investors, both the Chaudhry family and Blackstone declined to exchange their shares with Think & Learn, as reported by Mint on 1 August.

Now, a settlement is in progress resulting in Blackstone’s exit, and Chaudhry’s return as the chief executive of Aakash. As part of this arrangement, Chaudhry will swap a portion of his stake in Aakash with Think & Learn, and sell a part to Pai.

After the transactions, Chaudhry will retain approximately 9% stake in Aakash Education Services. Pai is acquiring the secondary shares from both Blackstone and Chaudhry, at a discount to the $950 million valuation Aakash was sold in January 2021.

Pai and Byju’s declined to comment, while Blackstone, Chaudhry and Davidson Kempner did not respond to requests for comments till press time.

Byju’s has sought to secure capital by divesting two subsidiaries—Epic and Great Learning—to settle the dues of its overseas lenders.

Last week Think & Learn reported its FY22 standalone revenue at ₹3,569 crore from ₹1,552 crore a year ago. Its Ebitda loss fell from ₹2,406 crore to ₹2,253 crore. The numbers do not include revenue from any subsidiary including Aakash.