Byju’s had launched its first rights issue in late January, but a court order directed the company to not tap the funds it had raised through that rights issue after many of its investors opposed the fundraise.
Thursday’s court order is the latest episode in the spectacular collapse of Byju’s, once the world’s most valuable edtech startup.
TechCrunch couldn’t determine exactly how much Byju’s ended up raising in the first rights issue.
In the letter, he urged his estranged investors to give him another chance and participate in the rights issue.
“But my benchmark of success is the participation of all shareholders in the rights issue.
BlackRock, an investor in Byju’s, estimates that its stake of Indian edtech giant, once valued at $22 billion, is now worth nothing.
So it doesn’t come as a surprise that BlackRock has implied a zero valuation to Byju’s.
At the end of October last year, BlackRock had cut the valuation of Byju’s to about $1 billion.
However, the research’s note chart (embedded below) did use zero in the column for estimated value.
The story has also been updated to emphasize BlackRock’s valuation adjustment in its Byju’s stake.
In a research note, HSBC estimates that the Indian edtech giant Byju’s, once valued at $22 billion, is now worth nothing.
The write-down in its estimation makes Byju’s one of the most spectacular startup slides in recent memory.
Those issues — coupled with abrupt resignations from its auditor and board members — contributed to derailing a $1 billion fundraise deliberation by Byju’s.
Prosus, one of Byju’s largest investors, publicly slammed the startup, alleging it “regularly disregarded advice” from the backer.
It stands to reason then, that in the research note HSBC also estimated the value of Prosus’ 10% stake in the Indian startup to be zero because of the ongoing legal cases and funding crunch.
Byju’s is holding an extraordinary general meeting Friday, where it will attempt to pass the resolution over the rights issue.
The rights issue values Byju’s under $250 million, a stunning drop from the $22 billion valuation it carried in early 2022.
Prosus Ventures, Peak XV Partners and Chan Zuckerberg Initiative are among the investors who didn’t participate in Byju’s recent $200 million rights issue.
The investors have instead sought, using legal means, to remove Raveendran and his family from the startup and to invalidate the rights issue.
The investors quit the startup’s board whereas the global auditing giant Deloitte dropped the account of Byju’s over these concerns last year.
Byju’s secured favorable outcomes in two court hearings Thursday, paving the way for the embattled edtech startup to move ahead with the extraordinary general meeting scheduled for Friday.
The National Company Law Tribunal refused to stay on Thursday Byju’s planned EGM to increase the authorized share capital for the $200 million rights issue.
The matter will be heard again on April 4, but as the lawyer representing the estranged four investors of Byju’s warned, once the authorized share capital has been increased, it cannot be reversed.
Separately, the Karnataka High Court said Thursday it will only hear the case where the investor group seeks to remove Byju’s founder and chief executive Byju Raveendran from the firm after two months.
The rights issue is crucial for Byju’s, once India’s most valuable startup, as it seeks to tap the $200 million it has already received from a set of investors, including Raveendran.
Camshaft disclosed in court filings this week that some $533 million it managed for Byju’s Alpha, a U.S. unit of Indian edtech group Byju’s, was transferred to another 100% and U.S.-based subsidiary of Byju’s, thereby refuting allegations that the Indian firm used the wealth manager’s services to misappropriate money.
In the court filings, Camshaft said the capital was transferred to Inspilearn LLC, a Delaware-based subsidiary of Byju’s.
Camshaft also clarified that Byju’s or any of its entities are not limited partners in the hedge fund.
Camshaft Capital attracted media attention last year after lenders of Byju’s questioned the legitimacy of the wealth advisor as they claimed the $533 million was a collateral for a $1.2 billion they had lent to the Indian startup.
A select few estranged investors in Byju’s later used the allegation to discredit Byju’s founder Byju Raveendran’s credibility.
Why some VCs are pulling back from Europe, Google’s AI push, and who is the CEO of Byju’s?
Hello, and welcome back to Equity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.
This is our Monday show, in which we take a look back at the weekend and what’s ahead in the week.
We also had an extra episode this weekend digging into the Reddit IPO that you can find here.
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In a 758-word letter, content of which was reviewed by TechCrunch, Raveendran claimed that the shareholders violated several “essential” local rules.
Raveendran claimed in the letter that the extraordinary general meeting lacked the minimum quorum and failed to win majority support for proposed resolutions.
Raveendran claimed the EGM was convened without adhering to the procedures set out by law and only 35 of Byju’s 170 total shareholders attended, representing around 45% ownership in the company.
The rights issue resets the startup’s valuation, once at $22 billion, to about $25 million.
“Our rights issue has seen an overwhelming response.
The participating shareholders — whose combined ownership in Byju’s exceeded 60% — also passed the resolution to reconstitute the board of Byju’s.
“At today’s Extraordinary General Meeting shareholders unanimously passed all resolutions put forward for vote.
Late last month, Byju’s launched a rights issue where it sought to raise about $200 million at a massively discounted rate.
Raveendran told shareholders earlier this week that the rights issue had been fully subscribed and requested all existing investors to participate and maintain their ownership.
“[…] I understand that participating in this rights issue may seem like a Hobson’s choice.
Byju’s cut the pre-money valuation ask in the rights issue to about $20 million to $25 million, TechCrunch earlier reported.
If they don’t participate in the rights issue, they risk losing nearly all their stake in Byju’s.
“Our rights issue is fully subscribed and my gratitude to my shareholders remains strong,” founder and chief executive Byju Raveendran wrote in a letter to shareholders Tuesday.
“But my benchmark of success is the participation of all shareholders in the rights issue.
“I understand that participating in this rights issue may seem like a Hobson’s choice.
