From $22 Bn To $2 Bn — BYJU’S Looking To Raise $100 Mn At 90% Valuation Cut

Beleaguered edtech major BYJU’S is planning to raise $100 Mn to $200 Mn via a rights issue at a much lower valuation of $2 Bn. This is a nearly 90% valuation cut compared to its peak $22 Bn valuation at which the edtech decacorn raised funds in 2022, Bloomberg reported. 

However, on the same day, BYJU’S India’s chief financial officer (CFO) Nitin Golani told PTI that the edtech startup is looking to raise capital in the range of $7 Bn-$8 Bn during its upcoming rights issue in February. 

“Our core business revenue has also increased significantly. There are several brands within the company that have seen an increase in valuation. If you combine the valuation of all the businesses, it will be worth a bare minimum of around $7-8 Bn,” Golani told the news agency.

The comments came hours after BYJU’S released its financial statements for FY22 after a delay of nearly two years. The edtech major saw its losses surge 81% YoY to INR 8,245.2 Cr as against a 120% YoY increase in revenues to INR 5,014.6 Cr.

Citing his rationale for the ‘significant’ increase in revenue, Golani said that Aakash was acquired when the latter was clocking around INR 1,000 Cr in annual revenues. He claimed that the coaching arm had scaled its revenues to INR 2,700 Cr, translating into a valuation increase to $2 Bn from $1 Bn earlier.

It must be noted that the startup’s cash cow, Aakash, saw its profit widen by 82% YoY to INR 79.5 Cr in FY22 as revenues crossed the INR 1,400 Cr-mark. 

He also claimed that Great Learning, which BYJU’S acquired for $600 Mn (INR 4,989 Cr as per current exchange rates), had increased its bottom line to INR 900 Cr – 1,000 Cr from INR 400 Cr at the time of acquisition, leading to a significant rise in its valuation. 

However, dragging down the company’s ship were not-so-fruitful acquisitions WhiteHat Jr and OSMO, which piled further on the losses. In the past couple of years, BYJU’S undertook 13 acquisitions, which, as per Golani, have not ‘given returns as per expectation’ to the company. He also added that the Bengaluru-based edtech firm has ‘significantly curtailed spending’ towards WHJ and OSMO.

While WhiteHat Jr saw its loss before tax jump sharply to INR 2,877 Cr in FY22 from INR 1,549 crore in the previous fiscal, OSMO’s losses before taxes surged 58% YoY to INR 946 Cr during the period under review. 

All these subsidiaries were also flagged by the auditor in FY22 results for borrowing huge sums from the parent Think & Learn even as they continued to make heavy losses. Not just this, BYJU’S other subsidiaries are also said to have availed loans at lower than market rates and not complied with the Companies Act, 2013. 

Overall, BYJU’S had a lengthy list of due receivables to the tune of INR 3,800 Cr at the end of FY22, the final status of which cannot be confirmed.

This also comes nearly a couple of weeks after BlackRock slashed the valuation of the edtech giant on its books to less than $1 Bn. Piling on top of that has been Dutch VC firm Prosus which too lowered BYJU’S valuation to less than $3 Bn in November last year.

It must be noted that BYJU’S three external board members resigned en masse in June 2023 over issues surrounding its $1.2 Bn Term B loan payments and delays in filing financial statements. The members included Peak XV’s GV Ravishankar, Russell Dreisenstock of Prosus, and Vivian Wu of Chan Zuckerberg Initiative.

The mounting losses have cost the company dearly leading to BYJU’S undertaking a mass restructuring exercise at its group companies. This has resulted in mass layoffs and shelving expansion plans. Overall, the edtech juggernaut has laid off more than 5,000 employees in the past two years, as per Inc42’s layoffs tracker. 

Meanwhile, the company has set its eyes on filing FY23 results before the proposed rights issue, Golani added.