Prosus has marked down the value of its shareholding in embattled edtech Byju's to zero and recorded a fair value loss of $493 million on account of its investment in the company, the the tech investor said in its FY24 annual report on June 24.
It held a 9.6 percent effective stake in Byju's before the company's rights issue.
"We have impaired Byju's down to zero at the end of FY24. We have written down Byju's primarily because we have inadequate information on company’s financial health, liabilities, and future outlook," a Prosus spokesperson said.
In a slideshow for investors, the internal rate of return (IRR) from its investment in Byju's is marked at minus (-) 100 percent.
IRR is a measure of profitability of an investment. A negative IRR occurs when the estimated outgoing cash flow is less than the projected incoming cash flow over the lifetime of the investment.
This comes at a time when Prosus and other Byju's investors like Peak XV Partners have mounted multiple legal challenges against the edtech company's management and its decisions, including a bid by the promoter family to do a rights issue that may almost entirely erase investors' shareholdings.
"We are seeking protection of our rights and all shareholders. There are number of actions that the company’s management has taken. We have hope for the company's outlook. The key for us to change the governance of the company. That is the first step," the company's management said in a post-earnings call with mediapersons.
Byju's is raising $200 million in a rights issue at a 99 percent cut to its last valuation of $22 billion. However, the National Company Law Tribunal (NCLT) has ordered the company not to use the cash from the rights issue until the matter is decided in court.
In H1, Prosus had marked down the valuation of Byju's to less than $3 billion, representing an 86 percent decline from the previous funding round valuation of $22 billion.
"Edtech continues to be a very interesting area for us. At the same time, our busineses have not performed. We spent a lot of time to improve their performamce. We have three large positions in edtech- stack overflow, Skillsoft and Byjus . All three of them have not performed. Byjus we have written down to zero. Byju's has been an important contributor to challenged performance in the last year," Prosus said.
Byju's was last officially valued at over $22 billion in October 2022, when it raised a $250 million funding round.
In July 2023, Prosus’ representative on Byju’s board, Russell Dreisenstock, stepped down from the edtech company, later citing poor reporting and governance structures as reasons behind the exit.
The series of board exits came at a time when the company had come under fire for a host of issues including delayed financial results, and the resignation of its auditor, Deloitte. Along with Dreisenstock, Chan Zuckerberg Initiative’s Vivian Wu and , and Peak XV Partners (Sequoia Capital India)’s GV Ravishankar also stepped down in July 2023.
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