Byju’s India CFO asserts confidence in rights issue, expects strong interest at lucrative price

The embattled edtech firm is reportedly seeking to raise funds via a rights issue of $100 million at valuation of less than $2 billion.

Byju’s is looking to raise funds via a rights issue which will allow existing investors to raise their stakes at a more 'lucrative price' at a time when the company's valuation has fallen steeply, a top executive of the edtech major told Moneycontrol.

“The valuation at which the rights issue will happen is still being discussed. We fundamentally believe that the company has a lot more value than what is being demonstrated right now,” said Byju’s India chief financial officer Nitin Golani.

“If we are to offer a lucrative valuation to some of the existing investors, there will be takers for that value. As a consequence, we will be able to raise some money,” he added.

The embattled edtech firm is reportedly seeking to raise funds via a rights issue of $100 million at valuation of less than $2 billion, which is a 90 percent reduction from its last funding round where the company was valued at $22 billion.

“We have a lot of investors who have invested in our company at like $12 billion valuation, $15 billion valuation, $18 billion valuation and even $22 billion valuation. If we were to give them a very lucrative price to be able to invest in the company, I'm sure they will come forward to invest,” said Golani.

“I'm sure you're aware of the fact that the company has a liquidity crunch and we certainly need money to be raised,” he added.

Golani, who became the company’s India CFO in October last year, said that he has been talking to 80 existing shareholders once every week to communicate the opportunities and challenges that Byju’s faces.

“I've got the who's who of the PE-VC world on the cap table. If I am able to continue to get their support, I'm very confident that we will be able to get this company back on track,” he said.

The company’s consolidated revenue jumped 118 percent from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22, whereas losses ballooned from Rs 4,564 crore in FY21 to Rs 8,245 crore in FY22.

Byju's filed its FY22 financials with the Ministry of Corporate Affairs (MCA) on January 23, almost 22 months after the reporting period ended. Meanwhile, the audit of its FY23 financials is yet to be completed even as FY24 is ending.

“The immediate mandate that I have is to close the FY23 audit as soon as possible. You will see a significant improvement in FY23 over FY22 and in FY24 over FY23,” said Golani.

“I am not saying the company will become profitable. All I'm saying is that at least it will be moving in the right direction and continue to improve on profitability,” he added.

Global investment management firm BlackRock, which holds less than 1 percent stake in Byju’s, has cut down the edtech company's valuation to $1 billion from the high of $22 billion it fetched in early 2022.

This comes amid a series of valuation downgrades by Byju’s’ investors over the past year. In November 2023, tech investor Prosus marked down the value of its stake in Byju's, resulting in a company valuation of less than $3 billion, representing an 86 percent decline from the previous valuation of $22 billion.

The company has laid off thousands of employees in the past two years as it battled a double blow of drying venture capital funding and slowing demand for online learning services.