SUMMARY
The move to trim the valuation came after a Swiss bank accused Macquarie Capital of charging management fees based on an “outsized and outdated valuation” of BYJU’S
According to people familiar with the development, Macquarie Capital had invested a few hundred millions of dollars in BYJU’s in 2021
Interestingly, the edtech major valued itself more than 99% lower from its peak valuation of $22 Bn during the recently concluded $200 Mn rights issue
Australia-based Macquarie Capital has reportedly slashed the valuation of its stake in edtech major BYJU’S by nearly 98%.
As per rough calculation, this translates to $440 Mn as against the edtech’s peak valuation of $22 Bn in 2022.
Sources told Bloomberg that Macquarie Capital’s move to almost write off its entire stake in the startup came after Swiss bank Julius Baer accused the investment firm of charging management fees based on an “outsized and outdated valuation”.
As per the report, Julius Baer’s chief investment officer Yves Bonzon shot off a letter to the company in January, claiming that Macquarie was still charging the bank’s clients fees based on a 2022 funding round that pegged BYJU’S at $22 Bn.
Noting that Macquarie Capital was too “slow to revalue the stake and provide information”, Bonzon reportedly cited other instances where the edtech’s investors have marked down its valuation by as much as 95%.
A Macquarie spokesperson told Bloomberg that the information was “incomplete and not up to date,” without elaborating further.
According to people familiar with the development, Macquarie Capital had invested a few hundred millions of dollars in BYJU’s in 2021. On the other hand, Julius Baer’s clients had pooled their capital via a feeder fund into a Macquarie vehicle that held the stake in the startup.
Interestingly, Julius Baer also reportedly internally marked down the valuation of the feeder fund by 80% in December 2023, citing it “challenging” to justify the $22 Bn valuation that Macquarie Capital had stuck to.
“We believe this demonstrates a disincentive for Macquarie to devalue the position, despite the strong market indications that the March 2022 valuation no longer holds, in contravention of your fiduciary duties as a fund manager,” read the letter by Bonzon.
With this, Macquarie Capital has joined a growing list of BYJU’S’ investors that have slashed the valuation of the startup on their books.
In January this year, BlackRock trimmed the valuation of its stake in the edtech major by almost 95% to $1 Bn, a far cry from $22 Bn it was pegged at in 2022. In November last year, Dutch investor Prosus marked down the value of its stake in the startup by more than 85% to under $3 Bn.
Prior to that, Baron Capital also cut the valuation of BYJU’S on its books by 44.6% to $11.7 Bn at the end of June 2023. Peak XV Partners also significantly marked down the fair value of its investment in the edtech giant in August 2023.
Interestingly, the edtech major valued itself more than 99% lower (compared to the peak $22 Bn valuation) during the recently concluded $200 Mn rights issue.
The edtech giant is grappling with fires on multiple fronts and has been in the headlines for all the wrong reasons in the recent past, including a public standoff with its investors and lenders, a looming debt crisis, a bevy of legal cases, delayed financial statements, mass layoffs, and growing scrutiny from regulatory authorities.
It also invited the ire of investors recently for undertaking the rights issue at a 99% valuation cut, which prompted investors to convene an extraordinary general meeting (EGM) to seek the ouster of founder and CEO Byju Raveendran and the reconstitution of the company’s board (which only includes his kin).
Earlier in the day, Inc42 also reported that the startup has yet again delayed salary payments to its employees.
