BlackRock cuts Byju’s valuation for 2nd time



BlackRock has marked down the value of its stake in Indian edtech start-up Byju's by 26% in Q1 2022 and by 62% YoY, reducing the firm's estimated valuation to less than $8.4bn. Byju's, currently seeking fresh capital to repay loans, was valued at $22bn in 2021

BENGALURU : BlackRock, the global leader in asset management and a minority shareholder in Byju’s, has reduced the valuation of its stake in the Indian edtech startup for the second time this year. During the quarter ended 31 March, BlackRock marked down the value of its shares in Byju’s by 26% compared to the previous three months, and by a substantial 62% from a year ago.

Consequently, Byju’s estimated valuation as of 31 March stood at less than $8.4 billion, to mark a significant drop from its valuation of $22 billion a year earlier.

BlackRock’s action comes weeks after Byju’s raised $250 million in debt from Davidson Kempner Capital Management, a US investment manager, as part of its ongoing $1-billion funding round at a valuation of $22 billion.

In May, VCCircle reported that the asset manager had almost halved the value of its holdings, implicitly valuing Byju’s at about $11 billion.

Meanwhile, T. Rowe Price, an American asset manager, has increased the value of its stake in Byju’s by about 11.5% in the March quarter, compared with the earlier three months. The latest disclosure would mean it now values Byju’s at $11.5 billion, up from around $10 billion as of 31 December 2022.

To be sure, fair value adjustments by public market investors like BlackRock are typically based on the asset manager’s internal assessment of the macro and micro environments, and do not necessarily indicate a permanent markdown of a startup’s overall valuation. Still, the markdowns add to the woes of Byju’s, which has failed to file FY22 results on time, and is seeking to raise millions of dollars in fresh capital to repay loans taken to acquire test-prep firm Aakash.

Byju’s failure to file FY22 results on time have also opened a breach in the covenants, allowing its creditors to renegotiate terms, including a demand for potential repayment or a higher interest rate.

Founded in 2011, Byju’s reported a loss of 4,589 crore for FY21, compared with a loss of 232 crore in the previous year.

Bloomberg previously reported that Byju’s had been looking to raise $500 million at a valuation of $22 billion to tide over a cash crunch. Byju’s was said to be looking to raise $250 million for Aakash in pre-IPO funding. It was earlier also looking to raise $800 million to $1 billion via a public listing of Aakash at a valuation of over $3.5 billion.

However, after the recent valuation markdowns, Byju’s may find it difficult to convince either new or existing investors to put in fresh capital at its desired valuation.

Queries to Byju’s didn’t elicit a response till press time. The markdown was first reported by news portal Inc42.

Byju’s is backed by Sequoia Capital, Lightspeed Venture Partners, General Atlantic, Qatar Investment Authority, Owl Ventures, CPPIB, Tiger Global, Tencent, Verlinvest, T. Rowe, and Sofina.

Earlier, BlackRock, T. Rowe Price and Vanguard have regularly made such valuation adjustments in startups. Public market investors of Ola and Flipkart had previously marked down their fair value estimates of the ventures.

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