BYJU’S gets 50% vote on rights issue; invites key shareholders to join to prevent dilution

BYJU'S Founder and CEO, Byju Raveendran, has notified investors that the edtech firm garnered over 50% votes to increase the authorised share capital for the $200 million rights issue. It has invited some of its "valued existing shareholders" to join the rights issue to safeguard their ownership stake from dilution.

"...In response to the postal ballot which was announced on 7 March, we already got more than 50% votes to the increase in authorised share capital,” Raveendran wrote in an email to shareholders, seen by YourStory.

"...I am aware that some of our valued existing shareholders were unable to participate earlier in the rights issue. In good faith, the board is considering making an offer of renounced shares to existing shareholders to ensure that there is no more dilution to their shareholding," he added.

Prominent investors in BYJU'S, such as Prosus, General Atlantic, Sofina, and Peak XV, attempted to void the rights issue floated in January at an enterprise valuation of about $220 million, representing a 99% reduction from BYJU’S peak valuation of $22 billion.

"Despite the animosity shown by some of the investors in pursuing uncalled-for legal actions, we continue to show good faith towards all our shareholders and would like all of you to be part of our turnaround story," Raveendran’s email noted.

"While we have received significant interest from third parties, our priority remains with our existing shareholders and hence we are looking at how we can extend this opportunity to all of you," he added.

The development comes after the National Company Law Tribunal (NCLT), in a hearing on Thursday, refused to stay the extraordinary general meeting (EGM) scheduled for Friday, March 29, aimed at increasing BYJU’S authorised share capital for the $200 million rights issue.

A group of investors led by Prosus had voiced opposition to the EGM initiated by Think and Learn Pvt Ltd—the parent company of BYJU’S, before NCLT. The tribunal has listed the case for further hearing on April 4.

Earlier, in an order dated February 27, the NCLT directed that the funds received by BYJU’S for the rights issue be placed in a separate escrow account, with instructions not to withdraw them until the disposal of the oppression and mismanagement suit filed by the group of four investors against the management of the company.