Prosus writes off investment in BYJU'S, records $493 million loss
Tech investment firm Prosus has written off its 9.6% stake in BYJU'S, resulting in a loss of $493 million, as per its FY24 annual report. The write-off was due to insufficient information about BYJU'S financial health and future prospects. The internal rate of return (IRR) from Prosus's investment in BYJU'S is marked at minus (-) 100%, indicating a negative cash flow over the duration of the investment.
Prosus and other investors challenge BYJU'S management
Prosus, along with other investors like Peak XV Partners, has lodged legal challenges against BYJU'S management and its decisions. This includes a bid by the promoter family to conduct a rights issue. "We are seeking protection of our rights and all shareholders," said Prosus's management during a post-earnings call. They also expressed hope for the company's future but emphasized the need for governance changes as the first step toward improvement.
BYJU'S rights issue halted amid legal disputes
BYJU'S is currently attempting to raise $200 million through a rights issue, a significant reduction from its last valuation of $22 billion. However, the National Company Law Tribunal (NCLT) has ordered BYJU'S to halt the use of funds from this rights issue until all legal matters are resolved. Earlier in H1, Prosus had marked down BYJU'S valuation to lower than $3 billion, marking an 86% decline from its previous funding round valuation.
Prosus Ventures writes off $530 million investment
Prosus Ventures has written off its $530 million investment in BYJU'S, amid a legal fight between the company and some of its institutional backers. This contentious decision comes as BYJU'S controversial $200 million rights issue threatens to wipe out the shares of most of its top investors, unless they participate in it. "BYJU'S has been an important contributor to challenged performance in the last year," Prosus stated, acknowledging the underperformance of its edtech investments including Stack Overflow, Skillsoft, and BYJU'S.
Board members step down
Several board members have resigned from BYJU'S amid allegations of poor reporting and governance structures. These include Prosus's representative Russell Dreisenstock, Chan Zuckerberg Initiative's Vivian Wu, and Peak XV Partners's GV Ravishankar. This development occurred in July 2023, following the company's last official valuation at over $22 billion in October 2022, when it raised $250 million. The resignations mark another significant challenge for the edtech company amid ongoing legal disputes and financial concerns.
