Byju’s investors set up working group to engage with edtech months after stepping down from board

Byju's investors set up an informal working group to communicate with the company

Six of Byju's biggest investors have constituted an informal working group to engage with the company, track its progress, and provide suggestions, people familiar with the development said.

The group, which was formed a few weeks ago, includes some of Byju's largest investors, such as General Atlantic, Prosus, Peak XV, Sofina, Chan Zuckerberg Initiative, and Verlinvest.

Peak XV declined to comment. Queries sent to Byju's and the other five investors did not elicit any response.

Investors' move to set up an informal working committee comes three months after three key investor board members stepped down from the board of Think & Learn Pvt Ltd, which runs Byju’s, due to differences with founder and CEO Byju Raveendran.

In June, GV Ravi Shankar, from Peak XV (formerly known as Sequoia Capital India), Vivian Wu from the Chan Zuckerberg Initiative, and Russel Dreisenstock from Prosus all resigned from their positions abruptly.

Nearly a month later, Prosus issued a media statement stating that Byju's executive leadership consistently disregarded Dreisenstock's advice and recommendations on matters related to strategy, operations, legal affairs, and corporate governance. Simultaneously, Peak XV communicated in a letter to its Limited Partners that the lack of transparency within Byju's management had prompted Ravishankar's departure from the company's board.

Adding to this, Byju's long-standing auditor, Deloitte, who had been associated with the company since 2015, also resigned around the same time. The reason cited for this resignation was the delay in releasing the financial results for the fiscal year 2021-22. The company then onboarded BDO as its official auditor for fiscal year 2022 and is expected to release its much-awaited results later this week, after a long delay of 19 months.

Byju’s, one of India’s most high-profile startups, rose to new highs in March last year when it became the country’s most valued startup. But since then, it has come under fire due a host of issues revolving around alleged mis-selling, abrupt resignations of senior management, and thousands of mass layoffs. The company also came under the scanner of India’s financial probe agency Enforcement Directorate in April this year.

While Byju’s has been fighting multiple battles domestically, it also has been having a tough time in dealing with its $1.2 billion term loan B creditors internationally. The creditors accelerated the repayment late last year after Byju’s made technical defaults on the loan.

In September, after months of negotiations with the lenders, Byju’s made a proposal to repay the entire $1.2 billion loan amount to lenders within six months with an initial payment of $300 million in three months. Byju’s put two of its key assets upskilling platform Great Learning and US-based book reading platform Epic for sale and is expecting to garner about $800 million from the sale.

Earlier this week, lenders, who have a claim over 60 percent of Great Learning, appointed risk advisory firm Kroll to safeguard the company’s assets. The move was aimed at discovering the real price of Great Learning, particularly in the case of a management buyout.

Separately, Byju’s has also been negotiating with Davidson Kempner, another US-based investment firm, which committed about $250 million in structured instruments linked to future cash flows of Byju’s biggest asset–Aakash Educational Services.

However, Byju’s had a technical default even on the Davidson Kempner loan, following which the US-based investor sought to take control of Aaksh. The investment firm also withheld a majority of the amount and Byju’s was able to raise only about $100 million.

Byju’s has now been in talks with Ranjan Pai, one of the company’s earliest investors to raise funds to repay the debt to Davidson Kempner along with interest. Newspaper Economic Times reported on October 12 that Pai might look to invest about $250-300 million in Aakash with an initial investment of $170 million which will be used to repay Davidson Kempner.