Prosus cuts Byju’s valuation to under $3 billion

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Following the tumultuous time faced by Byju’s in the last year, with backlash from its major investors, board, and employees; Prosus, the Netherlands-based tech investor, has marked down the value of its stake in Byju’s. This has resulted in the company’s valuation going under $3 billion. This decline represents an 86% drop from its peak valuation of $22 billion, at which the troubled firm had raised $250 million from investors in October last year.

Byju's logo

This event marks the third time in a year that Prosus has downgraded Byju’s valuation. It has invested $536 million in the edtech company since 2018. In June, the company revalued its investment to $493 million. This marked an 8% decline and brought Byju’s value to $5.1 billion. In a statement in July, Prosus revealed that its representative, Russell Dreisenstock, resigned from the company’s board because the executive leadership at Byju’s regularly disregarded his advice relating to strategic, operational, legal, and corporate governance matters.

“We have reported a markdown in Byju’s current value. We have written it down by a further $315 million, so our effective valuation on Byju’s is sub-$3 billion. It doesn’t necessarily reflect the long-term view of the business. It reflects the current trading circumstances,” disclosed Ervin Tu, the interim group CEO of Prosus and Naspers, during the firm’s post-earnings call on Wednesday.

A series of backlashes for Byju’s

This new development comes in the face of multiple board exits from the company, for which it was under fire for mismanagement and delayed financial results. This was followed by the resignation of its auditor, Deloitte. Additionally, Chan Zuckerberg Initiative’s Vivian Wu and Peak XV Partners’ GV Ravishankar also stepped down in July.

The Bengaluru-based edtech company has also been under fire as for the mass layoffs and the delaying of full and final settlements of its laid-off employees. It also came under attack by the Enforcement Directorate for the violation of FEMA regulations. In November, the Board of Control for Cricket in India (BCCI) also dragged Byju’s to the NCLAT over the jersey sponsor dispute.

In its April-September earnings presentation, Prosus listed e-pharmacy companies PharmaEasy and Byju’s among its ‘large underperformers’ within its portfolio. This has impacted the investor’s internal rate of return.

In September, Byju’s submitted a proposal to its lenders. Through this, the company intends to fully repay its $1.2 billion term loan B within the upcoming six months. The edtech company aims to achieve this by making an initial payment of $300 million within the next three months.

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