Byju’s: Byju’s seeks $200 million in rights issue at $250 million valuation amid deep cash crunch

Troubled edtech firm Byju’s has kickstarted a right issue to raise up to $200 million, effective today, as per a notice sent to investors – and seen by ETtech. Byju’s–which is facing multiple crises and is in urgent need of capital–is likely to price the share offering at a nominal value that would ascribe it a valuation of around $220-250 million, people aware of the matter said.

Sources aware of the discussions said the fair market value would be arrived at separately, in case the issue is not fully subscribed. Byju’s valuation has seen significant downgrades from several investors including BlackRock to just about $1 billion.

Also read | Byju’s FY22 losses soar to Rs 8,245 crore; cash-strapped edtech explores rights issue at $500 million valuation

In the note to investors, CEO Byju Raveendran said the company has not ‘shied away from taking several tough decisions’ amid its current challenges.

“The Board believes it is imperative that the company raises capital in order to create a glidepath to deliver strong shareholder value. This capital raise is essential to prevent any further value impairment and to equip the company with necessary resources to deliver on its mission,” Raveendran said. The company last raised equity capital 21 months ago.

Also read | For more capital, Byju’s must pass a tough test

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The Bjyu’s founder said the rights issue will offer existing shareholders the opportunity to participate in this proposed capital raise to the extent of their shareholding and beyond. He – along with cofounder Divya Gokulnath, brother Riju Ravindran and others – holds around 26% in Byju’s parent Think & Learn. Raveendran is in talks with multiple investors to finance his pro-rate investment in the company.Also read | From $22 billion to $1 billion: Byju’s valuation at BlackRock bottom

According to the note to investors, founders have infused around $1.1 billion into the company over the past 18 months, “as a testament to the steadfast and continuous faith in the business and its mission.”

The rights issue will be open for subscription for 30 days.

Also read | Liquidity crisis will be addressed in 45-60 days, I’ll be the last man standing: Byju Raveendran tells senior execs

“We believe an expeditious capital raise will provide the company with the resources it needs to rebuild and scale. This shall be used for the continuation of business operations, to manage obligations and to make the company more sustainable,” the note added.

A spokesperson for Byju’s did not immediately comment on the rights issue.

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