Valuation disquiet over Pai's Aakash move

Shareholders of Byju’s (Think & Learn Pvt. Ltd) and Aakash Education Services Ltd have raised objections to business tycoon Ranjan Pai’s proposal to convert debt to equity in Aakash, the group’s crown jewel, multiple people with knowledge of the developments said. Their primary concern: it would dilute the value of their stakes.

- Sneha Shah & Ranjani Raghavan

American private equity major Blackstone, a shareholder of Aakash, and global investment group Prosus NV, a shareholder of the parent entity Think & Learn, have written to the board to communicate their dissent. Prosus has also sent a legal notice to Pai, who is the chairman of Manipal Education and Medical Group.

Last week, the board of Aakash, led by chartered accountant Shailesh Haribhakti, had approved the conversion of Pai's $250-300 million debt in Aakash to equity in a board meeting. However, while the conversion is approved, it is not complete as certain processes remain to be followed.

"The working committee of investors (of Byju's) has registered its disapproval," one of the people cited above said on condition of anonymity. This is because their shareholding in the parent takes into account the valuation of subsidiary Aakash.

The shareholders' main objection is that the conversion was approved at a lowered valuation of ₹4,500-4,800 crore (around $600 million). This is far lower than the price Byju's paid in 2021 when it acquired Aakash for around $950 million.