Byju’s in advanced talks to raise $1 billion funding to prevent investor revolt: Report
The Indian edtech giant is reportedly in advanced talks with potential new shareholders to raise $1 billion in funding to restore investor confidence in the wake of a governance crisis. The company is also mired in legal disputes over a disputed $1.2 billion term loan.
Byju's is planning to raise $1 billion in funding to restore investors' confidence in the company after it faced a governance crisis following the exit of board members representing three global investors, according to a report.
Sources familiar with the matter told Bloomberg News the Indian edtech startup is in advanced talks with potential new shareholders to raise $1 billion in funding as it attempts to sidestep a revolt by some investors.
According to these sources, a part of the fund that is expected to be raised will most likely be used by Byju's to pay down a disputed $1.2 billion term loan. It needs to be noted that Byju's and its lenders are currently involved in legal cases in the United States over the restructuring of the loan. Further, three sources told Reuters that Byju's has investors to reconsider quitting its board.
In 2022, the leading startup was valued at around $22 billion.
Moreover, Byju's Founder and chief executive Byju Raveendran seeks to reconstitute the company's board only after the completion of the fundraising as new investors may possibly occupy some of the vacancies, Bloomberg said in its report.
Byju's is struggling with a governance crisis after three external board members of Think & Learn stepped down from the board over differences with the founder over the delayed filing of FY22 financial statements as well as its approach to its lenders
These three firms would be Peak XV Partners and Prosus Ventures, and Chan Zuckerberg Initiative (CZI).
The latest to exit Byju's would be Deloitte Haskins & Sells Llp last week. This resignation also brought Byju's under the radar of the corporate affairs ministry.
Under Section 143 of the Companies Act, if a statutory auditor quits an audit engagement they are required to report to the government any fraud in the company if there is a reason to believe that such a thing is happening.
As per the report, although the board members did not give any reasons for stepping down, Deloitte said it was severing ties with Byju's over delays in disclosing some financial statements. Further, Byju's also faced investigation over suspected violations of foreign exchange laws.
On Tuesday, Bloomberg News reported that Byju's is offering benefits such as preferential treatment in the case of liquidation to potential investors. It also added that none of its existing shareholders have that option.
However, Reuters could not immediately verify if existing shareholders in Byju's have that option. Also, Byju's did not immediately respond to the request for comment.
Recently, Byju's notified investors that it will submit audited earnings for 2022 by September and 2023 results by December, as per the report.
(With inputs from agencies).
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Business NewsCompaniesNewsByju’s in advanced talks to raise $1 billion funding to prevent investor revolt: Report
First Published:27 Jun 2023, 07:09 PM IST
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