Byju’s Successfully Completes $200 Million Rights Issue Amid Shareholder Tensions

Edtech giant Byju’s has announced the successful completion of its $200 million rights issue, despite facing challenges with major investors, including Prosus and Peak XV, who have yet to show interest in participating. The Bengaluru-based startup, valued at $22 billion in its last funding round in early 2022, revealed its plans to raise funds through a rights issue last month.

Byju’s had adjusted the pre-money valuation to approximately $20 million to $25 million for the rights issue, a move aimed at making the offering more attractive. However, a group of investors, including Prosus and Peak XV, has not yet expressed interest in participating, potentially risking a substantial loss in their equity stake in Byju’s if they choose not to join the rights issue.

Byju Raveendran, founder and CEO of Byju’s, expressed gratitude for the successful subscription of the rights issue in a letter to shareholders but urged all stakeholders, including those in the investor group, to participate. In the letter, Raveendran acknowledged the complexity of the situation and emphasized the importance of all shareholders coming together to support the company’s renewed mission.

The Prosus-led group had previously called for an extraordinary general meeting (EGM) to remove Raveendran and his family members from Byju’s. However, the investors lack the voting rights to implement such changes, as clarified by Byju’s in a statement earlier this month. The EGM is scheduled for this Friday.

In an effort to address concerns and ease tensions with the investor group, Raveendran assured the appointment of a third-party agency to monitor the fundraising process in the rights issue. Additionally, Byju’s is committed to restructuring the board and appointing two non-executive directors.

The letter acknowledges the challenging decisions shareholders face and positions the rights issue as a crucial step to prevent permanent value erosion, emphasizing the importance of preserving and building greater value for all stakeholders.

Byju’s, once on the trajectory to go public through a SPAC deal in early 2022, faced setbacks due to market conditions influenced by geopolitical events, including Russia’s invasion of Ukraine. Despite recent governance challenges and investor concerns, Byju’s remains optimistic about its brand strength, highlighting notable growth in website and app traffic.

The successful completion of the rights issue signals a significant financial move for Byju’s amid ongoing challenges, as the company continues to navigate its path in the competitive edtech landscape.