Byju’s aims to raise $1 billion to avert shareholders revolt: Report

Byju’s is reportedly in advanced talks to raise $1 billion from prospective new shareholders. This comes as the edtech giant aims to avert an investors revolt and strip founder Byju Raveendran of some of his control over the company. 

The edtech company is offering benefits to potential investors, including preferential treatment in the case of liquidation, as per a report in Bloomberg. None of its existing shareholders have a so-called liquidation preference. 

As per the report, Byju’s is aiming to close the round within two weeks. It stated that shareholders and creditors are looking to dilute Raveendran’s influence following the slowdown in the online education market post-COVID and as the company missed deadlines to file financial results as well as an interest payment on a $1.2 billion loan. 

Also read: Byju's may face EPFO action over delay in PF payments: Report

This development comes after representatives of Peak XV, Prosus NV, and the Chan-Zuckerberg Initiative quit the board. The resignations came in the same week Deloitte Haskins & Sells resigned as Byju’s auditor.

Deloitte had said that it was not provided certain financial statements it had sought. In a letter to the board members of Think & Learn Private Limited, the parent company of Byju’s, Deloitte said that the delay will have a significant impact on their ability to plan, design, perform and complete the audit in accordance with the applicable standards. It said that in view of the aforesaid factors, it tendered its resignation as auditors. 

Also read: Byju's tells investors it will file 2022 earnings by September: Report

The edtech company soon appointed BDO (MSKA & Associates) as its new auditor, and stated that it will help them "uphold the highest standards of financial scrutiny and accountability."

Meanwhile, the company has been fighting off demands from certain investors to strip Raveendran of some of its privileges. The founder has the backing of some of the startup’s existing shareholders, who along with Byju Raveendran control a large voting bloc, the report added. 

The company subsequently told investors that it will file 2022 audited earnings by September and 2023 results by December. 

Byju’s valuation that had soared to $22 billion in 2022 was slashed to $8.4 billion this year by BlackRock. 

Also read: Three board members confirm resigning from Byju's; edtech firm says 'working towards constituting a diverse board'

Also read: 'If you take money...': Mohandas Pai, an early investor in Byju's, calls for better governance after auditor exit