The parent company of Byju’s, Think and Learn, announced a rights issue on Monday in an effort to raise $200 million from its current investors. Subscriptions to the issue will be accepted for a full 30 days. Byju Raveendran, the founder and CEO, notified the shareholders in a letter that the board had decided to use the rights issue mechanism to raise capital.
According to sources, the issue will occur at a post-money valuation of $220–250 million, which is 99% less than the $22 billion valuation of the company’s most recent funding round.
Byju Raveendran, the company’s founder, is among the majority of current investors who are anticipated to take part in the round. In order to draw in current investors, rights issues are usually valued at a significantly lower amount than the company’s fair market valuation.
The edtech company is currently experiencing a severe cash crunch, and as a result, lenders and vendors have filed a case against it with the National Company Law Tribunal under the Insolvency and Bankruptcy Code.
In his letter to the shareholders, Raveendran compared the struggles the company is facing to those portrayed in William Ernest Henley’s poem “Invictus.” “I have not flinched or sobbed in the face of extreme circumstance. My head is bloody but unbowed under the blows of chance, wrote Raveendran.
We are confident that a quick capital raise will give the business the funds it needs to expand and rebuild. This will be used to manage responsibilities, carry out business operations, and strengthen the company’s sustainability, the letter stated. In order to generate significant shareholder value, the company’s board of directors, according to Raveendran, feels that raising capital is essential.
He continued, “This capital raise is essential to prevent any further value impairment and to provide the company with the resources it needs to fulfill its mission.” Raveendran stated, “We have cut our burn and worked to become a lean organization, razor-focused on execution, during the 21 months since our last external capital raise.”
Raveendran disclosed in the correspondence that the company’s founders have contributed more than $1.1 billion of their own money to it in the last eighteen months. We have given up a great deal in our personal lives for the benefit of the business. We are passionate about the mission of this company, having dedicated our lives to its development. Our zeal and enthusiasm are unwavering,” Raveendran remarked.
Byju’s valuation dropped to less than $3 billion in November 2023 as a result of tech investor Prosus reducing the value of its investment in the company. Byju’s valuation was recently reduced to $1 billion by the international investment management firm BlackRock, which owns less than 1% of the company.
The business released its FY22 financial results last week, showing a consolidated revenue increase of 118% from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22. Also, from Rs 4,564 crore in FY21 to Rs 8,245 crore in FY22, its losses increased dramatically.
