South African technology investor Prosus NV has taken a conservative accounting stance for its stake in Byju’s parent Think & Learn Pvt. Ltd, valuing the Indian edtech firm at almost the same cost as its initial investment of about $578 million.
Prosus, however, reported high growth metrics across its other investments in the edtech sector, as well as Swiggy, InstaMart and PayU, its other portfolio companies in India.
“In September 2022, the group lost significant influence in Byju’s as it no longer exerts significant influence over the financial and operating policies of the entity,” Prosus said in its financial statement for the six months ended 30 September, issued on Wednesday.
The loss of “influence” is attributed to the investor stake falling below 10%, said a person familiar with the matter.
“In case of Prosus, since its shareholding fell below 10% in Think & Learn (the parent of Byju’s), it lost certain rights and resultant influence on the company. In such cases, the accounting changes and the fund then values the stake at cost (the price at which it bought the stake),” the person cited above said.
Prosus said the fair value of Byju’s was done by a third-party firm, wherein it has valued its 9.67% stake in Byju’s at $578 million, which assigns a conservative valuation of $5.97 billion to Byju’s.
“The group accounts for its retained interest in the Byju’s investment at fair value through other comprehensive income. This change from accounting for Byju’s as an associate is because the provision of Byju’s audited financials did not align with the timing of the close of our financial reporting periods, so we did not have sufficient information to make fair assumptions for our Group’s financial statements,” a Prosus spokesperson said in a statement.
Byju’s was valued at over $22 billion by investors earlier this year.
Prosus’ stake in Byju’s stood at 10.57% as of April 2021, before falling to 9.81% as of April 2022, and 9.67% as of September. The investor’s stake in Byju’s diluted as the edtech firm made fresh fundraising including from founder Byju Raveendran.
Prosus also noted that barring its trading losses of $178 million, “reflecting one-off adjustments to its edtech associates (investments) Byju’s and Udemy”, the overall edtech portfolio performed strongly this year, with revenue growing 38% to $334 million.
Prosus also lost significant influence in US edtech firm Udemy as it lost its board representation, accounting its 12.16% stake at fair value of $207 million.
“We have stopped equity accounting for Byju’s and Udemy from September 2022,” Prosus said.
In India, Prosus is also an investor in Swiggy, Meesho, PharmEasy, Eruditus, Elastic Run and Urban Company, among others. The investor reported high growth in Swiggy and PayU.
“Our share of Swiggy’s revenue grew faster at 72% to US$150m, reflecting higher average order values and increased revenue from delivery fees and advertising sales,” it said.
Similarly, Prosus said consolidated revenue of India-focused PayU grew revenue 33% (H122 57%) to $412m, led by growth in payments in India and Turkey, and a scaling credit business in India.
At Swiggy, the core restaurant food delivery business delivered order growth and GMV (Gross Merchandise Value) growth of 38% and 40% respectively for the first six months of the year. Total quick commerce and GMV grew 20 times and 15 times respectively during the first six months of the year, Prosus said.
“Our share of Swiggy’s trading loss increased to US$105m (compared to H1 FY22: US$34m), driven by investment in both the core restaurant food delivery business to increase growth and in Instamart to expand its footprint,” Prosus said.
At PayU, Prosus said trading losses expanded to $80m from $27m in H1FY21 as it invested in credit and new payment products.
Overall, consolidated revenue at PayU grew 57% to $412 million on the back of growth in payments in India, Turkey and Poland, as well as scaling of the credit business in India.
“In India, our largest payments market, TPV (Total Payment Volume) grew 59% to US$28bn, and revenue increased 48% to $183 million, following increased digitalisation in ecommerce, financial services and bill payments, and a rebound in post pandemic travel,” Prosus said.
Last month, Prosus terminated its $4.7 billion agreement to acquire payments provider BillDesk.
The group said it focuses on “meaningful businesses in the online classifieds, food delivery, payments and fintech, and education technology sectors in markets including India and Brazil”.