Byju's reporting and governance structures did not evolve sufficiently for a company of that scale, said the company's biggest institutional investor, Netherlands-based Prosus. This comes a month after its board representative, Russell Dreisenstock, stepped down from the edtech company.
Prosus, in an official statement on July 25, added that executive leadership at Byju's regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters.
"The decision for our Director to step down from the Byju's Board was taken after it became clear that he was unable to fulfill his fiduciary duty to serve the long-term interests of the Company and its stakeholders," the investor said.
Last month, Dreisenstock, along with two other investor board members--GV Ravi Shankar of Peak XV Partners (formerly Sequoia Capital India) and Vivian Wu of Chan Zuckerberg Initiative, had stepped down from Byju's board.
In response to the statement, a Byju's spokesperson said, "We have noted the observations of our valued investors. We have updated our shareholders about definitive steps taken to improve corporate governance and financial reporting."
Prosus claiming that its board representative resigned because of disagreements with the edtech firm's executive leadership contradicts Byju's position. Byju's had previously stated that the board resignations occurred because the investors' shareholding had fallen below the minimum required threshold. It is also the first time a board member publicly acknowledged differences between the founders and the then-board members.
Moneycontrol had exclusively reported last month about these differences and what transpired between Raveendran and the three board members, prompting the latter to step down.
On the same day, Deloitte, one of the biggest auditing firms globally, also tendered its resignation, adding to an already long list of troubles for the world's most-valued edtech startup.
Prosus, in its statement, further added, "Byju's sits at the intersection of India and education, two very important and strategic areas of investment for the Netherlands-based investor."
"Although we no longer have a representative serving on the Board of the company, we continue to believe in the potential of Byju's and its role in revolutionising access to quality education in India and around the world. As a shareholder, Prosus will continue to assert its rights, collaborating with other shareholders and government authorities to safeguard the long-term interests of the Company and its stakeholders," the investor added.
In September last year, Prosus had classified Byju's as a non-controlling financial investment after the investor's stake fell to 9.67 percent. Prosus had pegged the fair value of Byju's at $5.98 billion then, much lower than its last official valuation of $22 billion.
“Macroeconomic conditions have changed in the several months preceding our half-yearly financials, generally resulting in significant declines in company valuations across the technology sector. The fair value of the group’s Byju's investment was determined by a third-party firm,” Prosus had told Moneycontrol then.
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