Byju’s aims to raise $200 million through a rights issue, marking a significant 99% cut in valuation

Cash-strapped edtech giant BYJU’S has initiated a $200 million rights issue to secure funds from its current investors.

The company is aiming to raise the capital at a post-money valuation of $225 million, marking a substantial 99% decrease from its previous valuation of $22 billion.

BYJU’S stated that the funds would be used for ongoing capital expenditure and general corporate purposes, emphasizing that the rights issue provides existing shareholders an opportunity to contribute to BYJU’S growth.

Founder Byju Raveendran expressed, “This rights issue is for those deeply invested in BYJU’S, supporting our ongoing efforts. As both founder and the largest investor, the raised funds will address immediate liabilities and operational needs while preserving current shareholder rights.”

“I’m pleased to share that BYJU’S is approaching operational profitability, reflecting the success of our strategic initiatives and the resilience of our business model,” he stated. BYJU’S revealed that its founders invested over $1.1 billion in the last 18 months.

If the Byju’s rights issue isn’t fully subscribed, and the struggling edtech startup has to seek external investors, the fair market value will be determined separately, according to sources familiar with the discussions. Shareholders in Byju’s face potential dilution of their stakes if they don’t participate in the rights issue

This news follows BYJU’S disclosure of consolidated financials for FY22, almost 22 months after the year-end. The edtech giant’s net loss surged 81% to INR 8,245.2 Cr in FY22, while operating revenue rose over 120% YoY to INR 5,014.6 Cr. The financial statement raised concerns about continuing net losses, accumulated losses, and the outcome of the litigation for the $1.2 billion Term Loan B by Byju’s Alpha Inc.

BYJU’S has faced numerous challenges for over a year, including board member exits, layoffs, financial statement delays, growing losses, ED scrutiny, and a legal dispute with the BCCI.

You might also be interested in-Hyderabad-based Azad Engineering defence to manufacture aircraft engine components for Rolls-Royce in the defence sector