CCI Clears Manipal Group's Stake Boost in Aakash Educational Services

The Competition Commission of India (CCI) has cleared Manipal Group’s bid to purchase stake in Aakash Educational Services from its founder, JC Chaudhry. Currently, the founder owns a minority stake in Aakash as he earlier sold a significant portion of his shares to Manipal Group.

“…CCI has approved the combination involving acquisition in Aakash Educational Services Limited by Manipal Health Systems Private Limited and Manipal Education and Medical Group India Private Limited,” the watchdog said in an official statement, as quoted by media reports.

Manipal Group founder Ranjan Pai has about 40% stake in Aakash. He is the largest shareholders in the educational institute. Previously, Aakash was owned by Byju’s, which is facing insolvency proceeding and a series of legal troubles.

However, Pai intervened in Byju’s financial troubles by settling a $170 million debt owed to a US lender, which unlocked 27% of Aakash’s shares that had been pledged as collateral.

His total investment in Aakash reached $300 million, which was converted into equity by January 2024. The move cleared Aakash’s debts and effectively handed Pai control of the coaching company.

The CCI approval comes at a time when Aakash is looking to raise ₹500 crore to support its offline coaching operations. However, the National Company Law Tribunal (NCLT) has temporarily halted any changes to Aakash’s shareholding structure or Articles of Association (AoA).

The proposed fundraising would require amending the AoA - something BYJU’S, through its resolution professional, is contesting. During an NCLT hearing on April 30, Byju’s legal representative, Abhinav Vasisht, objected to what he described as an unlawful dilution of BYJU’s stake in Aakash.

He also raised red flags over the hypothecation of assets and unauthorised alterations to the AoA, particularly as the parent firm navigates insolvency proceedings.

Earlier this month, the National Company Law Appellate Tribunal (NCLAT) dismissed a plea filed by Byju’s, seeking approval for an equity fundraise by Aakash. The tribunal held that the NCLT’s order was interlocutory in nature and based on consensus between the parties, and therefore found no grounds for intervention at this stage.

The proposed equity raise had faced opposition from Blackstone, which holds a 6.8% stake in Aakash, citing concerns over the potential erosion of minority shareholder rights.