BlackRock cuts Byju's fair value by 62% for the second time since October 2022

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BlackRock, the world's largest asset management company (AMC), has reduced the fair value of Byju's, the world's most-valued edtech startup, by 62 percent. This is the second time BlackRock has reduced the fair value of Byju's since October 2022.

BlackRock, which holds less than 1 percent, has pegged the value of its 2,279 shares in the company at $4,043,471, effectively estimating Byju's fair value at $8.4 billion as of March 31, 2023. As of April last year, the company estimated Byju's valuation to be north of $22 billion, according to the AMC's filings with the Securities and Exchange Commission (SEC).

According to the filings, BlackRock also sold shares in Byju's during the period. Byju's declined to comment. Inc42 first reported about the development.

To be sure, these adjustments to fair values are typically based on AMC's internal assessment of the macro and microenvironment. They do not necessarily indicate a permanent markdown in the startup's overall valuation. Blackrock also holds only a minority stake in the company and thus has access to limited information about the company's operations.

The markdown, however, comes at a time when Byju's is gearing up for a massive fundraise worth almost a billion dollars, its second flat funding round, from a clutch of investors in the Middle East and the US. The company has already raised $250 million through structured instruments and is finalising another $700 million in equity.

The funding, if it goes through, will give Byju's some relief as it has been renegotiating terms with its lenders, who also demanded part prepayment of the $1.2 billion Term Loan B it had raised in November 2021.

Byju's has been in hot water over the last 15 months as the company has been making headlines for accounting irregularities, alleged mis-selling of courses, and mass lay-offs.

The company has laid off over 3,500 employees in the last 12 months as it was hit by a double whammy of drying venture capital funding and slowing demand for online learning services.

Byju's is also looking to get its tutoring services unit--Aakash Educational Services, which it acquired in April 2021 for nearly a billion dollars, listed on India's stock exchanges at a valuation of $3-4 billion. But, the company has also held exploratory merger talks for Aakash with its biggest rival Unacademy, Moneycontrol reported exclusively earlier in March.

Founded almost a decade back by Byju Raveendran, a former teacher, and his wife Divya Gokulnath, Byju's has raised over $5 billion in funding from equity and debt investors to date. It last raised a $250 million round in October at a flat $22 billion valuation.

The company recently also saw India's financial probe agency Enforcement Directorate (ED) conducting searches at its offices in Bengaluru.