BENGALURU: Edtech firm Byju’s can now go ahead with the $200 million rights issue as the National Company Law Tribunal (NCLT) on Tuesday reserved judgment on interim orders in the plea filed by four investors against the company.
According to sources, Byju’s rights issue will continue as per plan. The NCLT heard the petition filed by four investors -- Peak XV Partners, General Atlantic, Prosus and Sofina -- seeking an urgent order to stay the rights issue. However, the NCLT was not inclined to issue any order on Tuesday and that means the rights issue can proceed as planned and will close on Wednesday, the sources added.
The NCLT also observed Byju’s board can’t increase authorised share capital on its own and it directed that they can’t complete the rights issue until they call for an EGM (extraordinary general meeting) to increase authorised capital and take shareholder approval before proceeding for rights issue.
Sources also said the edtech company has given an undertaking to the court that they will not use the proceeds of the rights issue until the authorisation has been secured. Earlier investors argued that the rights issue can’t be allowed to proceed as it can’t be done without increasing authorised capital.
Last month, the firm announced it will raise $200 million by way of a rights issue to achieve operational sustainability. With the fundraising, it will be valued between $220 million and $230 million, a whopping 99% drop from its valuation of $22 billion in 2022.
Byju’s founder Byju Raveendran had said the funds raised will be utilised to clear immediate liabilities and meet operational requirements, while maintaining the current rights of our valued shareholders.
Investors filed an oppression and mismanagement suit against the management of the company in NCLT and to declare the rights issue as void. They sought reliefs that include directing the company to not take any corporate actions that will prejudice the rights of the investors.