PE: Byjus plans to raise funds at discount

PE: Byjus to raise funds at a discount of over 90% from its previous valuation.

Transaction:

• Beleaguered edtech startup Byju’s is looking at raising fresh funds at a discount of over 90 per cent from its previous valuation to get rid of its financial problems.
• The startup is seeking more than $100 million from existing investors via a fresh issuance of shares scheduled for February 2024 as per various media reports.

About Byjus:

• BYJU’S is an education technology (EdTech) company with presence in over 120 countries and claims to provide personalized learning programs to more than 150 million students around the world.
• The BYJU’S family of brands caters to a wide range of learners of all ages and includes BYJU’S Learning App, BYJU’S classes, BYJU’S Live, BYJU’S Tuition Centre, BYJU’S Future School, Epic, Osmo, Tynker, Aakash Education, Great Learning, and GeoGebra.
• BYJU’S has been backed by some of the world’s most prominent investors, including Chan-Zuckerberg Initiative, Naspers, CPPIB, General Atlantic, Tencent, Sequoia Capital, Sofina, Verlinvest, IFC, Aarin Capital, TimesInternet, Lightspeed ventures, Tiger Global, Owl Ventures and Qatar Investment Authority.

Rationale:

• Byjus rose to fame post covid developments in online education and went onto acquire several firms including Whitehat Jr., and Akash coaching classes.
• Byju’s once India’s most valued startup with peak valuation of over $22 Billion saw a meteoric rise to fame. Company planned to come with an IPO through SPAC deal in early 2022 with a valuation of over $40 Billion, however IPO plans were put on hold due to global disturbance.
• Recently the startup had been under lot of scrutiny as number of investors started correcting its valuation.
• In Nov 23 Porus which holds less than 20% in Byju’s corrected Byju’s Valuation to less than $3 Billion.
• PE Fund Blackrock has recently reduced valuation of Byju’s by 95% to around $1 Billion as per Tech Crunch. (Blackrock owns less than 1% stake in Think & Learn.)
• The startup was hit by number of irregularities including delay in filing of financials, resignation of Auditor (Deloitte), CFOs, FEMA Violation.
• Company allegedly defaulted on a $1.2 Billion debt given by lenders including Redwood & others leading to lost control of a unit.
• Startup delayed filing its FY22 financials where the losses have crossed about Rs 8200 crore against revenue of Rs 5000 Crore. Company is yet to file its FY23 results.
• Company had to fire around 4500 employees in Sept 2023 to cut costs, however it is still in troubles due to cash crunch.
• Latest reports by ET say that Byjus is trying to raise around USD 200 Million at valuation between $500 million and $1 Billion.
• At the same time the Investors are trying to remove founder Byju Raveendran from CEO and revamp the board on charges of compliance issues.