BYJU’S Early Investors Looking To Sell Stake

Several early investors in edtech decacorn BYJU’S, including Lightspeed Investment Partners and Chan Zuckerberg, are reportedly looking for buyers to sell partial or full stake in the edtech major.

Both Chan Zuckerberg Initiative and Lightspeed hold a 2.4% stake each in BYJU’S, according to data available with Tracxn. 

According to a Mint report, the investors are looking to book profit and have laid out ‘soft mandates’ to investment banks to look for buyers.

The investors want to cash out on their long-term investment in BYJU’S. While the talks are in the early stages, a final valuation is yet to be decided, the report said. However, a deal could be struck at as much as a 30% discount to the company’s last funding valuation of $22 Bn.

Another person cited by the publication stated that the valuation at which these investors might end up selling their stake could be as low as $14 Bn. However, if an investor is to go through a secondary share transfer, they would have to seek the approval of BYJU’S.

A BYJU’S executive, however, denied the development and said that no investor is looking to leave. It is prudent to mention that cofounder Byju Raveendran has the right of first refusal inserted as a clause in all share purchase agreements with BYJU’S parent Think & Learn Pvt Ltd.

The clause allows Raveendran to purchase investor shares before anyone else and even if selling investors find buyers, the cofounder has the option to match or exceed the said price. 

Interestingly, Bloomberg reported last week that Raveendran is looking to increase his stake to 40% in the company from 25% currently. The BYJU’S cofounder is in talks with financiers and investors to raise money to buy back existing shares. Raveendran also raised $400 Mn from global investors to purchase fresh shares last year.

The edtech decacorn is also in talks with private equity (PE) firm TPG Capital to raise funds. However, the PE firm has not yet submitted a bid for the edtech major’s shares, despite having conducted due diligence.

BYJU’S had a 2022 to forget as it was surrounded by controversies throughout the year. From the layoffs at group companies, which impacted around 4,000 employees, to the delayed filing of financial statements to heavy loss in FY21 to controversy with India’s child rights body, the edtech decacorn had a rough year.

However, amid all this, the company is targeting group profitability by the end of 2023.