The board of Think and Learn Private Limited (TLPL), the parent company of edtech major BYJU'S, on Monday approved raising $200 million through a rights issue to its existing shareholders to "support its ongoing efforts to drive growth and achieve operational sustainability".
"The proposed rights issuance by TLPL aims to fund the ongoing capital expenditure and support general corporate purposes. The rights issue enables existing shareholders to participate in BYJU’S growth journey," said the firm in a statement.
The issue will happen at a post-money valuation of $225 million, which is 99 per cent lower than the company's last funding round, which happened at a valuation of $22 billion, reported Moneycontrol on Monday. The founders of BYJU'S have personally invested more than $1.1 billion in the firm in the last 18 months.
In a note addressed to shareholders, the founders expressed the challenges the company has faced in recent months and their unflinching belief in the mission of BYJU’S. Despite the changing macro environment, they emphasised the company's resolve and the tough decisions made in the best interest of the company. Over the last many months, strategic measures have been taken to optimise costs and become a lean organization focused on execution. They stressed on the importance of raising capital to create a glidepath for strong shareholder value and prevent further value impairment. The letter acknowledged the shareholders' integral role in the company's journey and proposed this rights issue to offer existing shareholders an equal opportunity to participate in the capital raise. Byju Raveendran, founder of BYJU’S, said: “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. The funds raised will be exclusively utilised to clear immediate liabilities and meet operational requirements, while maintaining the current rights of our valued shareholders. I am also happy to share that BYJU'S is now less than a quarter away from achieving operational profitability, reflecting the effectiveness of our strategic initiatives and the resilience of our business model.”
This rights issue demonstrates the company's proactive approach to securing the necessary capital for growth and ensuring a promising future for all stakeholders. It aims to offer all existing shareholders the chance to participate in this proposed capital raise to maintain shareholding without the need to ascribe valuations.
BYJU'S is backed by investors such as General Atlantic, Prosus and Silver Lake. Earlier this month, BlackRock slashed BYJU'S valuation by 95% to $1 billion, while tech investor Prosus NV chopped it to under $3 billion last November.