Private Equity

PE Fund Investments

Byju's raises $200-M via rights issue at 99% lower valuation: report

Economic Times   note to shareholders  

Think and Learn Pvt Ltd, the parent company of embattled edtech service Byju’s - has raised USD 200 million - at a 99% lower valuation - via a rights issue.The development comes amid simmering tensions between the company’s co-founder & CEO Byju Raveendran and a group of investors who have demanded his removal citing lack of transparency in the company’s operations. As the rights issue is happening at a 99% discount to Byju’s peak valuation of USD 22 billion, investors not participating in the fundraise would see their shareholding effectively wiped out. The investors have termed the issue a ploy by the company’s founder Byju Raveendran to increase his shareholding at a throwaway price.The current board members of Think & Learn comprise Byju Raveendran, his wife and Byju’s co-founder Divya Gokulnath, and brother Riju Ravindran. In July, representatives of Prosus, Peak XV Partners and Chan Zuckerberg Foundation had resigned from the board. Earlier this month, investors including Peak XV and Prosus issued a notice requesting an EGM that is expected to be conducted on Friday, February 23.In a note to shareholders , Byju Raveendran has reportedly said “In order to increase shareholder representation, I commit to restructuring the Board and appointing two non-executive directors to the Board by the mutual consent of the founder and shareholders; right after the FY23 Audit, which we expect to close by the end of this quarter,” Regarding the issue of valuation, he has said in the letter that “the ownership of the company does not change pre and post a rights issue, so the question of valuation itself is irrelevant as value preservation is maintained.”The company has agreed to appoint a “third-party agency” to monitor fund usage. This agency will report to all shareholders on a quarterly basis, within 45 days from the end of the quarter, along with commentary from the board.