Prosus Stake In BYJU’S Has Zero Value: HSBC

SUMMARY

Prosus, a Dutch-listed technology investment company, made a significant $500 Mn investment in BYJU’S

We assign zero value to Byju’s stake amid multiple legal cases and funding crunch: HSBC said in a note on May 21

Recently, US-based asset management company Baron Capital Group reduced the fair value of its investment in the edtech firm by 99.85%

Financial firm HSBC has cast serious doubt on the future of edtech giant BYJU’S, assigning zero value to Prosus’ nearly 10% stake in the company.

This harsh assessment comes as BYJU’S grapples with ongoing legal challenges and worsening financial woes.

Dutch-listed technology investment company Prosus made a significant $500 Mn investment in BYJU’S, one of its largest bets in the Indian edtech market.

“We assign zero value to BYJU’S stake amid multiple legal cases and funding crunch,” HSBC said in a note on May 21.

“Previously, we valued around 10% stake in BYJU’S by applying (an) 80% discount to the latest publicly disclosed valuation,” it added.

The bank also assessed that several other startups have significantly decreased in value from their previous estimations.

Recently, US-based asset management company Baron Capital Group reduced the fair value of its investment in the edtech firm by 99.85% to $120 Mn as of March 31, 2024.

Baron Capital, holding 15,334 shares through the Baron Emerging Markets Fund and 9,201 shares via the Baron Global Advantage Fund, has valued its investments in BYJU’S at $75,485 and $45,294, respectively.

The edtech major has been grappling with fires on multiple fronts, including a looming debt crisis, impending mass layoffs, delayed salaries, a cash crunch and a bevy of legal and insolvency cases filed by its investors and vendors.

However, the Chennai bench of National Company Law Appellate Tribunal (NCLAT) dismissed an appeal petition filed by four foreign investors of BYJU’S.

The appeal was filed against the National Company Law Tribunal’s April 23 order, in which the tribunal declined to issue an injunction against BYJU’S for allegedly violating its earlier directives.

Meanwhile, the company has reduced the fixed pay for new sales hires by a massive 90%, multiple sources said, after linking salaries of sales staff to their performance last month, Inc42 reported.

The offer letters show fixed pay of INR 1.15 Lakh per annum, and variable pay (performance-linked) as a maximum of INR 2.8 Lakh per year.