EdTech Giant in Turmoil: BYJU'S Secures Funding But Faces Potential

19 Feb 2024 , 01:51 PM

Edtech giant Think and Learn, operating under the BYJU’S brand, has reportedly garnered a commitment of $300 Million from investors for its ongoing rights issue, scheduled to close by the end of February, according to sources familiar with the matter as reported by news agency PTI.

BYJU’S initiated a rights issue in January with the aim of raising $200 Million through an equity rights issue, valuing the enterprise in the range of $220-250 Million. This valuation marks a significant reduction of 99% from its peak valuation of $22 Billion.

Additionally, an extraordinary general meeting (EGM) is scheduled to be held on February 22, where shareholders are expected to vote on the removal of BYJU’S board led by founder Byju Raveendran, as per a report by the Times of India.

To oust the existing three-member board, comprising Raveendran, his wife Divya Gokulnath, and his brother Riju Ravindran, a majority of votes in favor of the resolution is required, the report further detailed. The resolution seeks to address governance, financial mismanagement, and compliance issues, with investors led by Dutch investment firm Prosus raising concerns.

The EGM notice highlights the shareholders’ previous requests for a meeting in July and December, which were reportedly disregarded by the board of directors. Notably, BYJU’S investors do not hold voting rights on CEO or management changes per the shareholder agreement.

Sources revealed that BYJU’S has received a commitment of around $300 Million for the rights issue to date. The company is also reportedly in negotiations with disgruntled investors for their participation in the rights issue, as their non-participation could lead to a significant reduction in their shareholding.

Furthermore, BYJU’S has offered to appoint two independent directors to enhance transparency, contingent upon the closure of the rights issue and the declaration of financial results for the 2023 fiscal year. The company aims to achieve full compliance with regulations by closing the financial results for FY 2023 in the current quarter.

Investors backing the EGM notice include General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, collectively holding around 30% stake in BYJU’S. These investors anticipate additional support at the upcoming EGM on February 23, following which they plan to approach the National Company Law Tribunal for the reconstitution of BYJU’S board.