As Raveendran, the CEO of Byju’s, confronts possible removal, the edutech company receives a boost of ₹2,500 crore
Amidst its financial challenges, the edtech firm Byju’s has secured a pledge of $300 million from its investors.
In the midst of severe financial turmoil and mounting pressure from creditors, Byju’s has garnered a $300 million commitment from its investors for the forthcoming rights issue. This move has led to a significant reduction of over 90 percent in the valuation of its parent company, Think and Learn, from its peak.
Investors have pledged $300 million (equivalent to ₹2500 crore) for Byju’s rights issue, scheduled to conclude by the end of February 2024.
In January, Byju’s initiated a rights issue aimed at raising $200 million through an equity rights offering, with an enterprise valuation estimated between $220-250 million. This marks a drastic 99 percent reduction from its peak valuation of $22 billion, attained during the Covid pandemic in March 2022.
In addition to its rights issue aimed at alleviating pressure from lenders, Byju’s has extended an offer to its dissatisfied investors, providing them with the opportunity to nominate two independent directors to improve transparency within the company. However, the appointment of these independent directors is contingent upon the completion of the rights issue and the announcement of the financial results for 2023.
According to a source, Byju’s has garnered a cumulative commitment of approximately USD 300 million for the rights issue up to the current date. While some investors have proposed expanding the size of the rights issue, the company’s primary focus is on effectively concluding the ongoing issue.
The source mentioned that negotiations are underway with disgruntled investors regarding their involvement in the rights issue. “Byju’s is currently engaging with dissatisfied investors as well. The company anticipates their participation, as otherwise, their ownership stake could diminish by nearly 50 percent,” stated the source.
Investors seek ouster of CEO Raveendran
A cluster of investors has convened a special Extraordinary General Meeting (EGM) to initiate a vote on the removal of the founders of Byju’s, following allegations of mismanagement and non-disclosure of information to shareholders. As per a source, the EGM notification has garnered support from General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl Ventures, and Sands Capital, collectively holding approximately 30 percent ownership in the company.
Shareholders will be holding a vote to pursue the dismissal of the founders – Byju Raveendran, his spouse Divya Gokulnath, and brother Riju Raveendran – from their positions on the Byju’s board, while also appointing new individuals to fill key roles.
Earlier, this investor sentiment had sparked turmoil within the company but was quelled by the majority shareholders. It’s worth noting that the Raveendran family possesses a 26 percent ownership stake in Byju’s.
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