BYJU’S Initiates $200 Million Rights Issue to Bolster Capital and Navigate Challenges

• ByStartupStory     |    January 29, 2024

In a strategic move, the board of Think and Learn Private Limited (TLPL), the parent company of edtech giant BYJU’S, announced the launch of a rights issue aimed at raising $200 million. The rights issue, open to all equity shareholders, is intended to fund ongoing capital expenditures and provide vital support for general corporate needs.

The rights issue, expected to be executed at a post-money valuation of $225 million, marks a significant shift compared to BYJU’S previous funding round, which valued the company at an impressive $22 billion. This decision aligns with BYJU’S commitment to financial sustainability and efficient capital allocation.

Founder Byju Raveendran emphasized the significance of the rights issue, stating, “This rights issue is about those who care the most about BYJU’S stepping up as we continue to turn the company around. Along with being a founder, I am also the largest investor in the company.” Raveendran further disclosed that BYJU’S founders have personally invested more than $1.1 billion in the edtech firm over the past 18 months.

The funds raised through the rights issue are earmarked to address immediate liabilities, meet operational requirements, and maintain the current rights of existing shareholders. Raveendran expressed confidence in the company’s trajectory, asserting that BYJU’S is now less than a quarter away from achieving operational profitability.

In its financial results for FY22 submitted last week, BYJU’S reported a consolidated loss of Rs 8,245 crore, marking an 80.6% increase from the previous fiscal year. Despite challenges posed by the pandemic-led edtech boom, the company recorded a substantial 120% rise in operating revenue, reaching Rs 5,014.6 crore in FY22.

BYJU’S, known for its rapid growth through strategic acquisitions, has encountered challenges including litigation concerns, issues with the Enforcement Directorate, a liquidity crunch, and uncertainties regarding its core business and acquisitions. BlackRock recently marked down its stake in BYJU’S by 95%, underscoring the significance of strategic cost optimization measures and a transition to a lean organizational structure.

Despite challenges, the founders remain optimistic about BYJU’S future, emphasizing the importance of raising capital to mitigate further value impairment. Prosus, in November 2022, slashed the fair value of the company to less than $3 billion, adding to the complexities faced by BYJU’S in the evolving edtech landscape.

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