Much-needed relief for Byju's: Ranjan Pai's ₹1,400-cr deal resolves Byju's dispute with Davidson Kempner

In what comes as a big relief to crisis hit edtech startup Byju's, Ranjan Pai, an early investor in Byju's, has acquired the debt held by Davidson Kempner.

Pai executed a ₹1,400-crore transaction to acquire Davidson Kempner's debt investment in Byju's, specifically linked with covenants on its subsidiary Aakash. With this, Pai, also the Chairman of Manipal Education and Medical Group, has effectively resolved the dispute between Byju's and investment management firm Davidson Kempner.

The transaction, which concluded on November 10, involved an entity of Pai purchasing all Non-Convertible Debentures (NCDs) of Davidson Kempner on the NSE CBRICS platform. As part of the deal, Pai will secure a seat on Aakash's board, marking a strategic move to strengthen his association with the embattled edtech firm.

Pai invested in Byju's through his venture capital fund Aarin Capital. He played a pivotal role in supporting the company over the years. Having initially invested about a third of the company, Pai's recent move to buy out Davidson Kempner's debt underscores his commitment to the edtech sector.

This resolution comes after Byju's faced a technical default on the $250 million loan it raised from Davidson Kempner in May. The deal with Pai not only settles the dispute but also releases the pledge on shares of Aakash, which were offered as collateral for the Davidson Kempner loan.

Aakash Educational Services, acquired by Byju's for nearly $1 billion in 2021, has proven to be the company's most successful acquisition. However, the due diligence process for the deal faced challenges, with about 70% of the transaction intended to be in cash. The valuation of Byju's over the past two years has led to reluctance from Blackstone and Aakash promoters to exchange their shares with Think and Learn, Byju's parent entity.

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