In a significant development, Ranjan Pai, the founder of Manipal Hospitals Group, is poised to provide a crucial Rs 300 crore financial facility to Think & Learn Pvt Ltd, the parent company of Byju’s. This move comes as part of a broader deal, which is expected to facilitate a partial exit for the Chaudhry family from Aakash Educational Services Ltd.
Boosting Byju’s Working Capital and Cash Flow
Byju’s, a prominent player in the edtech sector, will utilize this short-term financing to bolster its working capital and address its immediate cash flow requirements. However, it’s worth noting that negotiations are still ongoing regarding various aspects of the deal.
Potential for a $300 Million Investment by Ranjan Pai
Insiders have disclosed that Ranjan Pai’s total investment in Think & Learn Pvt Ltd could reach a substantial $300 million if the deal is successfully finalized. This underscores the strategic significance of this financial arrangement.
Strategic Workforce Restructuring
In a bid to reduce its working capital needs, Byju’s has been exploring options to cut costs. On September 26, a report by Mint revealed that the company was in the process of letting go of approximately 4,000 employees.
Debt Repayment and Share Swap
The funding extended by Ranjan Pai will primarily be used to repay a loan that Think & Learn Pvt Ltd had secured from US-based investor Davidson Kempner. This loan was backed by the cash flows of Aakash Educational Services. Earlier this year, Kempner had initially offered a loan of Rs 2,000 crore, but only Rs 800 crore was transferred to the edtech firm. Following reports of escalating litigation between Think & Learn and its overseas term loan lenders, the full loan was not extended.
Pai’s investment into Aakash Educational Services will facilitate the repayment of the outstanding Rs 800 crore to Kempner, along with an additional Rs 600 crore in interest. As part of this deal, Aakash’s founding family will exchange a portion of their Aakash shares for shares in Think & Learn Pvt Ltd.
Historical Context: Byju’s and Aakash Merger
To provide a broader context, the Chaudhry family had initially agreed to sell Aakash Educational Services to Byju’s in January 2021 for over $950 million in cash and shares. However, the share swap component of the deal encountered delays and hurdles. Byju’s faced challenges with investors and lenders, resulting in the Chaudhry family opting not to exchange their shares with the parent company, Think & Learn Pvt Ltd.
Working Towards Resolution
In recent developments, sources have indicated that a settlement is now being actively worked out to address these lingering issues. In a bid to meet its financial commitments, Byju’s took the step of putting two of its key subsidiaries, Epic and Great Learning, up for sale. This strategic move aims to raise between $800 million to $1 billion in cash. It is part of Byju’s overarching plan to honor its financial commitments, particularly the $1.2 billion Term loan B.
In sum, Ranjan Pai’s financial facility, coupled with the ongoing negotiations and strategic moves, demonstrates the evolving landscape of the edtech industry, with major players like Byju’s and Aakash Educational Services making pivotal strategic decisions to navigate their financial and operational challenges.