The Turmoil at Byju's: A Detailed Overview

Sydney Times

— 1 min read
The Turmoil at Byju's: A Detailed Overview

Introduction

In recent times, Byju's, once hailed as the world's most valuable edtech startup, has been facing a series of challenges that have significantly impacted its operations and reputation. From failed rights issues to allegations of corporate governance lapses, the company has found itself in troubled waters.

Court Order Halts Byju's Rights Issue

  • Byju's faced hurdles in raising the full $200 million from its rights issues despite claims of oversubscription.
  • India's National Company Law Tribunal restrained the company from proceeding with its second rights issue amid allegations of oppression and mismanagement by its shareholders.
  • The Tribunal ordered the company to maintain the status quo on existing shareholdings until a petition by investors General Atlantic and Sofina is resolved.

Byju's Struggles with Fundraising

  • Byju's launched its first rights issue in late January but faced opposition from investors, leading to a court order preventing the use of funds raised.
  • The company's valuation plummeted to $25 million from a once lofty $22 billion.
  • A subsequent attempt to raise funds through another rights issue was also stalled by the court order.

Investors' Concerns and Resignations

  • Some influential investors, including BlackRock, Prosus, and Peak XV, raised concerns about governance practices and ultimately resigned from Byju's board.
  • Deloitte dropped the startup's account, citing issues with the company's practices.
  • Prosus criticized Byju's for not evolving enough for a company of its scale.

Byju's Founder's Response

  • Byju's founder and CEO, Byju Raveendran, urged estranged investors to participate in the rights issue.
  • He emphasized the need for all shareholders to be involved in preserving and building value for the company.

BlackRock's Write-off

  • BlackRock wrote off its investment in Byju's, signaling a significant devaluation for the Indian firm.

Conclusion

The challenges faced by Byju's highlight the importance of strong corporate governance practices and investor relations in maintaining a company's success and reputation. The company's response to these challenges will determine its future trajectory in the competitive edtech landscape.

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