Updated February 21st, 2024 at 17:33 IST

Byju’s successfully completes $200 million rights issue despite valuation cut

The ongoing rift between Byju’s and some of its largest shareholders escalated in recent weeks with calls for an EGM to remove Byju Raveendran as company's CEO.

Reported by: Business Desk
Byju's rights issue | Image:Byju Raveendran
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Byju's rights issue: Edtech major Byju’s has announced the full subscription of its recently launched $200 million rights issue, even as the company faces a significant valuation adjustment and internal shareholder disputes. The Bengaluru-based firm, valued at $22 billion in its previous financing round in early 2022, revealed plans last month to raise $200 million through a rights issue, marking a substantial reduction in its pre-money valuation to approximately $20 million to $25 million, as reported by TechCrunch.

Despite the successful subscription of the rights issue, a group of major investors, including Prosus and Peak XV, have yet to indicate their participation, risking the potential loss of equity stake in Byju’s. Founder and CEO, Byju Raveendran, expressed gratitude for the subscription but emphasised the importance of broad shareholder participation, urging all investors to join the initiative.

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The ongoing rift between Byju’s and some of its largest shareholders, led by Prosus, has escalated in recent weeks, with calls for an extraordinary general meeting (EGM) to remove Raveendran and his family members from the company. Byju’s clarified that the investor group lacks the necessary voting rights to enact such changes, with the EGM scheduled for this Friday.

In an attempt to address the investor concerns, Raveendran outlined measures to foster transparency and governance, including the appointment of a third-party agency to oversee the fundraising process and the restructuring of the board with the addition of two non-executive directors.

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The latest developments mark a significant turn of events for Byju’s, which has faced challenges in securing new funding amidst governance issues and market uncertainties. Previous attempts to raise capital, including discussions for a $1 billion funding round last year, faltered following the departure of key board members and a technical default on debt obligations.

Despite these setbacks, Raveendran remains optimistic about Byju’s future, citing resilient user engagement and brand strength. He highlighted sustained growth in website and app traffic, underscoring user confidence in the platform's offerings despite recent challenges to the company's reputation.

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Published February 21st, 2024 at 10:55 IST