The Competition Commission of India (CCI) has given the green light for Manipal Group company and MEMG Family Office LLP to acquire a significant stake in Aakash Institute (AESL), a leading test preparation firm owned by Byju’s. This move involves converting debt into equity.
Background of the Acquisition
Ranjan Pai, Chairman of Manipal Education and Medical Group, acquired a debt of Rs 1,400 crore in Aakash Educational Services last November. This acquisition aimed to help the troubled edtech startup Byju’s settle its debt to US-based Davidson Kempner Capital Management. The debt was secured using Byju’s shareholding in Aakash as collateral.
In January, the Aakash board approved the conversion of Pai’s $300 million investment into equity. This conversion made Pai the largest shareholder with a 40% stake in Aakash Educational Services.
Details of the Transaction
The CCI stated that the transaction involves allotting identified equity stakes in AESL to Manipal Health Systems and MEMG Family Office LLP. Manipal Health Systems operates hospitals and provides healthcare services, while MEMG Family Office offers consultancy services. The approval also includes the right to seek the transfer of certain equity shares of AESL.
AESL’s Financial Performance
AESL, which Byju’s acquired in a mega deal for $950 million in 2021, has shown impressive growth. For the financial year ending March 2022, AESL reported a profit of Rs 79.5 crore, an 82.2% increase from the previous year. The company’s operating revenue also surged by 44.6% to Rs 1,421.3 crore.
AESL provides coaching services through various modes, including classroom-based, online, distance learning, and hybrid programs. It serves over 400,000 students across more than 310 centres nationwide.
The approval from CCI for Manipal Group to acquire a significant stake in Aakash Institute marks a significant step in the test preparation firm’s journey. This strategic move will likely bolster AESL’s financial standing and further enhance its service offerings. With Ranjan Pai’s substantial investment, AESL is poised for continued growth and success in the competitive education sector.
