SUMMARY
The VC firm would be significantly marking down the fair value of its investment in the edtech giant in the upcoming reporting period
Sources close to Peak XV told Inc42 that the markdown in the BYJU'S investment is expected in August 2023
Prosus, another key investor in BYJU’S, had claimed earlier this week that it was unable to fulfill the fiduciary duty in relation to the delay in BYJU’S audited financials
In another major blow to embattled BYJU’S, Peak XV Partners has reportedly told its limited partners that the VC firm would be significantly marking down the fair value of its investment in the edtech giant in the upcoming reporting period.
Peak XV declined to respond to Inc42 on the contents of the letter to its LPs or the current value of its investment in the edtech startup.
Sources close to Peak XV told Inc42 that the markdown in the BYJU’S investment is expected in August 2023
Peak XV also cited a lack of visibility into the company’s audited financials for FY22 and FY23 as a factor for taking “corrective measures” in its BYJU’S investments.
The letter to the LPs, reported by ET, comes soon after the resignation of Peak XV managing director GV Ravishankar from the BYJU’s board.
The letter reportedly claims that Peak XV was unable to influence the BYJU’S leadership on the lack of audited financials.
While the VC firm has said that it would be marking down BYJU’S investment, it did not give any further details on the potential value of the investment. “This is a developing situation, and we, alongside the other investors, continue to evaluate all available options,” said Peak XV, as per the report.
The report on the Peak XV’s letter to LPs comes a day after Prosus, the largest external shareholder of BYJU’S said that the company’s reporting and governance structures have not evolved sufficiently for a company of its scale.
“Despite repeated efforts from our Director, executive leadership at BYJU’S regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters,” Prosus said in a statement shared with media.
The Netherland-based VC firm added that the decision about its representative Russell Dreisenstock’s resignation from the board of BYJU’S was taken after it became clear that Dreisenstock was unable to fulfill his fiduciary duty to serve the long-term interests of the company and its stakeholders.
Peak XV’s Ravishankar, Dreisenstock, and Chan Zuckerberg’s Vivian Wu tendered their resignations from BYJU’S board last month.
Further, BYJU’S statutory auditor Deloitte, who was on retainer till 2025, also resigned citing the delay in providing adequate information to audit the company’s financial statements for FY22.
While the edtech giant appointed BDO (MSKA & Associates) as its statutory auditor, there is much confusion over when the company would actually report its numbers for the past two financial years.
Following the departures of the directors, BYJU’s has seen some reshuffling in its CXO layer. Former Vedanta Resources’ executive Ajay Goel was named as the company’s chief financial officer (CFO), while former SBI chairperson Rajnish Kumar and Aarin Capital cofounder and chairman TV Mohandas Pai were appointed to the a newly-constituted advisory council.
The resignations of the directors and statements from key investors come in light of a public legal battle between BYJU’S and the lenders of its Term B loan. While lenders had sought to accelerate the repayment of the loan, BYJU’s filed a lawsuit against the lenders alleging harassment over the recovery of the dues.
Most recently, the company reached a consensus with its lenders to reach amended terms for the $1.2 Bn by August 3, 2023.
Nevertheless, there are more headwinds expected for the company, which is looking to significantly lower its monthly burn. After a spate of layoffs, BYJU’S vacated a number of offices in Bengaluru to trim its costs this past week.
