BYJU’S Secures $300 Million Commitment for Ongoing Rights Issue, Offers Independent Directors to Miffed Investors
- ByStartupStory | February 19, 2024
Edtech giant Think and Learn, the parent company of BYJU’S, has reportedly received a commitment of $300 million from investors for its ongoing rights issue, which is set to close by the end of February. Sources familiar with the matter revealed that BYJU’S floated a rights issue in January to raise $200 million through an equity rights issue at an enterprise valuation in the range of $220-250 million, marking a significant reduction from its peak valuation of $22 billion.
In an effort to address concerns of certain investors, BYJU’S has offered to appoint two independent directors to enhance transparency, but this move is contingent upon the completion of the rights issue and the declaration of its financial results for the 2023 fiscal year.
“As of now, BYJU’S has received a total commitment of around $300 million for the rights issue. Some investors have also suggested increasing the rights issue size, but the company’s priority is to successfully close the existing issue,” said a source familiar with the matter. Negotiations are reportedly underway with disgruntled investors regarding their participation in the rights issue.
“BYJU’S is in discussion with disgruntled investors as well. The company expects that they will also invest, otherwise their shareholding will reduce by almost 50%,” added the source. Another source indicated that BYJU’S expects to finalize its financial results for FY 2023 in the current quarter, after which it plans to appoint two independent directors to its board as part of its discussions with dissatisfied investors.
The Extraordinary General Meeting (EGM) scheduled for February 23 has been supported by investors including General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, collectively accounting for around 30% stake in BYJU’S. These investors, led by Dutch investment firm Prosus, have called for the resolution of governance, financial mismanagement, and compliance issues, as well as the reconstitution of the Board of Directors.
Investors calling for the EGM have expressed their intention to approach the National Company Law Tribunal for the reconstitution of BYJU’S board if their concerns are not addressed. BYJU’S investors currently have no voting rights on CEO or management changes as per the shareholder’s agreement. A representative of one of the investors involved in the EGM stated that they expect more investors to join them in the upcoming EGM, indicating a potentially contentious shareholder meeting ahead.
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