BYJU'S rights issue gets $300M commitment

Edtech major Think and Learn, the parent company of BYJU'S, is learnt to have received a commitment of $300 million from investors for its ongoing rights issue, which will close by the end of February, sources aware of the development said.

BYJU'S floated a rights issue in January to raise $200 million through an equity rights issue at an enterprise valuation in the range of $220-250 million, which is a 99% reduction in its peak valuation of $22 billion.

Sources also shared that BYJU'S has offered miffed investors to appoint two independent directors to enhance transparency but only after the rights issue and declaring its financial result for the 2023 fiscal.

"BYJU'S has received a total commitment of around $300 million for the rights as on date. Some investors have also suggested increasing the rights issue size but the priority for the company is to close the existing issue successfully," said a source.

The source said that negotiation is also on with miffed investors for their participation in the rights issue.

"BYJU'S is in discussion with miffed investors also. The company expects that they will also invest, otherwise their shareholding will reduce by almost 50%," the source said.

Another source said that BYJU'S has offered to appoint two independent directors on the board to enhance transparency but the appointment can happen only after results for financial year 2023 are declared.

"BYJU'S expects to close the FY 2023 financial result in this quarter, which will make the company completely compliant with the rules. Thereafter, the company will look to appoint two independent directors to its board. The proposal is part of ongoing discussion with miffed investors who have called for EGM (Extraordinary General Meeting) on February 23," the source said.

According to a source, the EGM notice has been backed by General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who jointly account for around 30% stake in BYJU'S.

The investors led by Dutch investment firm Prosus in the EGM notice requested the resolution of the outstanding governance, financial mismanagement and compliance issues and the reconstitution of the Board of Directors.

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As per the notice, a consortium of BYJU'S shareholders had in July and December requested the board of directors for the meeting but it was disregarded.

BYJU'S investors have no voting rights on the CEO or management change as per the shareholder's agreement.

Meanwhile, a representative of one of the investors, who have called for EGM, said they expect more investors to join them in the upcoming February 23 EGM after which they will approach the National Company Law Tribunal for reconstitution of BYJU's board.

A query sent to BYJU'S in this regard elicited no immediate response.