Byju’s $200 million rights offering has been completely subscribed, although its founder pushed some of its key investors to participate despite a disagreement between the edtech business and its top owners.
In its latest month, the Bengaluru-based business, valued at $22 billion in its latest fundraising round in early 2022, proposed a potential $200 million rights offering. Byju’s rights issue pre-money valuation seek dropped from $20 million to $25 million, Eltrys reported.
The rights offer has not attracted investors like Prosus or Peak XV, according to a source. Without participating in the rights offer, they risk losing practically all of Byju’s equity.
“Our rights issue is fully subscribed to, and my gratitude to my shareholders remains strong,” founder and CEO Byju Raveendran wrote to shareholders Tuesday. But I measure success by all shareholders participating in the rights offering. We developed this firm collectively, and I want us all to join this fresh purpose. Your original investment started our journey, and this rights issue will safeguard and increase shareholder value.”
Recent weeks have seen the Prosus-led edtech organization demand an emergency general meeting to remove Raveendran and his family. Byju’s said earlier this month that investors cannot vote on such changes.
A Friday EGM is planned. Before the EGM, Byju petitioned the High Court of Karnataka against shareholders who wanted him removed from the edtech firm. Byju’s received relief on Wednesday evening when the High Court ruled every Friday resolution unlawful.
Raveendran tried to comfort investors in his recent shareholder letter. He added that the business would hire a third party to supervise rights issues, issue funding, and restructure the board with two non-executive directors.
I realize that participation in this rights issue may seem pointless. He said that this is the only way to avoid the lasting value degradation available today.
Byju’s has sought money for over a year. Deloitte and three important board members—Prosus, Peak XV, and Chan Zuckerberg Initiative—left the firm unexpectedly last year, delaying $1 billion in fundraising negotiations. After a technical default on a separate $1.2 billion term loan, Byju’s raised less than $150 million from Davidson Kempner and had to reimburse the investor the whole amount.
The previous eight months have marked a remarkable turnaround for governance-plagued Byju’s. Prosus reports that the firm acquired almost a dozen businesses in 2021 and 2022 for over $2.5 billion.
SPAC deals were planned to take Byju’s public in early 2022 at a $40 billion valuation. According to a source, Russia’s invasion of Ukraine in February 2022 lowered markets, causing Byju’s to postpone its IPO. As market circumstances deteriorated, so did Byju’s business prospects.
Recently, several Byju investors have openly questioned the startup’s business actions and demanded better governance.
Raveendran stated to shareholders, “Despite these headwinds we face as a company, there are tangible indicators of our enduring brand strength and future potential.” Despite decreased marketing spending, our website and app traffic has grown significantly. This shows how much our users respect our services and trust our material. Negativity has hurt brand impressions, but customer belief is growing.”
Byju’s announces $200M rights offering to reduce value by 99% fully subscribed.
