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Updated February 19th, 2024 at 08:06 IST

Byju’s rights issue attracts $300 million commitment amid governance concerns

Byju's has offered disgruntled investors the prospect of appointing two independent directors post-rights issue.

Reported by: Business Desk
Byju's leadership dispute
Byju's rights issue | Image:Byju Raveendran
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Byju's rights issue: Beleaguered edtech giant Think and Learn, operating under Byju's brand, has reportedly garnered a substantial commitment of $300 million from investors for its ongoing rights issue, set to conclude by February's end. The initiative, launched in January, aims to raise $200 million through equity rights issuance, marking a significant shift from its peak valuation of $22 billion to an enterprise valuation ranging from $220 to $250 million.

Byju's has offered disgruntled investors the prospect of appointing two independent directors post-rights issue, and after declaring its 2023 fiscal results, in a bid to enhance transparency within the organisation, news agency PTI reported quoting sources.

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"While Byju's has secured around $300 million in commitments for the rights issue thus far, negotiations are also underway with dissenting investors regarding their participation," stated a source close to the matter.

The company anticipates that failure by dissenting investors to participate could lead to a significant reduction in their shareholding, potentially by nearly 50 per cent.

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Moreover, discussions around appointing independent directors are ongoing, with Byju's aiming for compliance with regulations once its FY 2023 financial results are declared, expected in the current quarter.

However, the company faces mounting pressure from investors, including General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who collectively hold a 30 per cent stake. These investors have jointly called for an Extraordinary General Meeting (EGM) on February 23, backed by Dutch investment firm Prosus.

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The EGM notice demands resolution of governance, financial, and compliance issues, alongside the reconstitution of the Board of Directors. Despite this, Byju's investors lack voting rights concerning CEO or management changes, as per existing shareholder agreements.

An investor representative expressed anticipation of further support during the forthcoming EGM, following which they plan to approach the National Company Law Tribunal for board reconstitution.

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As of now, Byju's is yet to respond to queries regarding these developments.

(WIth PTI inputs.)
 

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Published February 19th, 2024 at 08:06 IST

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