Edtech player Byju's is looking to raise $200 million from its existing equity investors through a rights issue it launched on Monday, at a time when it deals with a host of legal and financial woes.
The board of Think and Learn Pvt. Ltd approved the issue to clear its immediate liabilities and meet operational requirements.
"The funds raised will be exclusively utilised to clear immediate liabilities and meet operational requirements, while maintaining the current rights of our valued shareholders," founder Byju Raveendran said in a statement.
"This rights issue is about those who care 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."
A rights issue allows existing shareholders to buy additional new shares in the company at a future date at a discount to the market price.
The issue is likely to value Byju’s at about $225-250 million, per reports, about 99% lower than at the time of its last external capital raise during which it was valued at $22 billion.
Since then, Byju’s has been struggling to raise fresh capital and repay its debts while it battles lawsuits amid numerous other challenges. The company has also laid off thousands of employees in multiple rounds since 2022 amid the liquidity crunch.
The founders have invested over $1.1 billion in the last 18 months, with Raveendran himself reportedly mortgaging his houses to pay salaries to employees.
While the company has not raised equity capital since its last funding round about two years ago, many of its investors have marked down its valuation. Recently, BlackRock, the world’s largest asset manager, slashed the value of its stake in Byju’s by almost 95% to around $1 billion.
Marquee global investors such as Prosus, Qatar Investment Authority, Canada Pension Plan Investment Board (CPPIB), Bond Capital, DST Global, Owl Ventures, Sumeru Ventures, Silver Lake, Oxshott Venture, Sands Capital, Footpath Ventures, XN Exponent, Tiger Global, T. Rowe Price, Mirae Asset, UBS Group, and Helion Venture Partners are all sitting on massive losses on their investments as most of them invested in the company at a valuation way higher than $1 billion.
The company recently filed its audited FY22 results with the Registrar of Companies (RoC) after a delay of nearly one and a half years. Its losses for the period under review widened to Rs 8,245 crore (around $1.1 billion at the prevailing exchange rates) in FY22 against a net loss of Rs 4,564 crore the year before. Meanwhile, the company’s consolidated revenue more than doubled to Rs 5,015 crore in FY22.
"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,” Raveendran said.