BENGALURU: Edtech firm Byju’s will raise $200 million by way of a rights issue to achieve operational sustainability.
According to sources, with the fund raising, the edtech firm will be valued between $220 million and $230 million, a whopping 99% drop from its valuation of $22 billion in 2022. The company needs the funds to meet its operational requirements. This raising of funds through a rights issue comes at a time when the company has been struggling for the past 21 months to raise external capital. The founders of the company have infused over $1.1 billion into the company over the past 18 months.
Byju Raveendran, founder of Byju’s said, “The funds raised will be exclusively utilized to clear immediate liabilities and meet operational requirements, while maintaining the current rights of our valued shareholders.”
He added that the company is less than a quarter away from achieving operational profitability. In his letter to shareholders, Raveendran explained, “A rights issue, by design, is a participatory pro-rata means of raising capital, wherein existing shareholders have the right and the privilege of contributing to the needs of the company. It is an equal opportunity to all shareholders to participate and maintain shareholding without the need to ascribe valuations. We shall take a decision in the larger interest of the company.”
He also expressed the challenges that the company has been facing and the importance of raising capital to create a glidepath for strong shareholder value and prevent further value impairment. In the letter, the founders said that they have made immense personal sacrifices for the sake of the company and have spent their lives building the company. “Our enthusiasm and zeal continue unabated.
As we prepare to face any challenge in the future, we draw inspiration from these lines in Invictus by William Ernest Henley: “In the fell clutch of circumstance I have not winced nor cried aloud. Under the bludgeonings of chance My head is bloody, but unbowed,” Raveendran told shareholders.
Recently, the family office of Ranjan Pai, Manipal Education and Medical Group chairman, invested Rs 1,400 crore in edtech firm’s subsidiary Aakash to clear its debt to Davidson Kempner. According to reports, his investment has now been converted into equity and that Pai has become the largest shareholder in Aakash.
For Byju’s, both its subsidiaries Aakash and Great Learning have been performing well,as they grew 40% and 77%, respectively immediately after acquisition.