Byjus reports successful completion of $200 million rights issue despite cutting company valuation by nearly 99%

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Byju’s Founder Urges Investors to Participate in Rights Issue

Byju’s, the Bengaluru-headquartered edtech startup valued at $22 billion, has announced that its recently launched $200 million rights issue has been fully subscribed. However, the company’s founder and CEO, Byju Raveendran, urged some of its major investors to participate in the rights issue amid a rift between the edtech group and its largest shareholders.

Background on Byju’s Rights Issue

In early 2022, Byju’s announced that it would attempt to raise about $200 million through a rights issue. The startup cut the pre-money valuation ask in the rights issue to about $20 million to $25 million, TechCrunch earlier reported.

Investors Show No Interest

A group of investors, including Prosus and Peak XV, have yet to show any interest in participating in the rights issue, according to a person familiar with the matter. If they don’t participate in the rights issue, they risk losing nearly all their equity stake in Byju’s.

Raveendran’s Letter to Shareholders

In a letter to shareholders on Tuesday, Raveendran wrote: "Our rights issue is fully subscribed and my gratitude to my shareholders remains strong. But my benchmark of success is the participation of all shareholders in the rights issue. We have built this company together and I want us all to participate in this renewed mission."

He added: "Your initial investment laid the foundation for our journey, and this rights issue will help preserve and build greater value for all shareholders."

Prosus-Led Group Calls for EGM

The Prosus-led group has called for an extraordinary general meeting (EGM) in recent weeks to remove Raveendran and his family members from the edtech group. However, Byju’s said that the investors don’t have the voting rights to enact any such change.

Byju’s Petitions Against Shareholders

Ahead of the EGM, Byju’s petitioned in the High Court of Karnataka against shareholders who seek his removal from the edtech group. The High Court granted a relief to Byju’s on Wednesday evening, ruling that any resolution passed on Friday will be invalid.

Raveendran Seeks to Calm Situation

In the new letter to shareholders, Raveendran has sought to calm the situation with the investor group. He said: "I understand that participating in this rights issue may seem like a daunting task, but I assure you that it is essential for the growth and success of our company."

Byju’s Growth Prospects

Byju’s has been growing rapidly, with its revenues increasing by over 10 times in the past two years. The startup has also expanded its operations to several countries, including the US, UK, and Australia.

Conclusion

The completion of Byju’s $200 million rights issue is a significant milestone for the company, but it remains to be seen how the shareholder rift will impact its future growth prospects. Raveendran’s efforts to calm the situation with the investor group will be crucial in ensuring that the company continues on its path of success.

Timeline of Events

Byju’s announces plans to raise $200 million through a rights issue in early 2022.
The startup cuts the pre-money valuation ask in the rights issue to about $20 million to $25 million, TechCrunch reports.
A group of investors, including Prosus and Peak XV, show no interest in participating in the rights issue.
Byju’s petitions the High Court of Karnataka against shareholders who seek Raveendran’s removal from the edtech group.
The High Court grants a relief to Byju’s on Wednesday evening, ruling that any resolution passed on Friday will be invalid.

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