Prosus cuts valuation of Byju’s by half to sub-$3 bn | Mint
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Business News/ Companies / Prosus cuts valuation of Byju’s by half to sub-$3 bn

Prosus cuts valuation of Byju’s by half to sub-$3 bn

Byju’s and Pharmeasy have been underperformers for Prosus, with its investment in both under water

Byju Raveendran, founder & CEO of Byju's. (Photo: Mint)Premium
Byju Raveendran, founder & CEO of Byju's. (Photo: Mint)

Dutch investor Prosus Ventures on Wednesday axed the valuation of Byju’s by more than half to below $3 billion, in another setback for the edtech giant battling lenders, lawsuits and investigations.

This is the third time the tech investor, which owns 9.67% of Byju’s, has marked down the company’s valuation, after slashing it to $5.9 billion last November and further to $5 billion this June. At its peak in July 2022, Byju’s was India’s most valued startup worth $22.5 billion.

Prosus interim group chief executive Ervin Tu and group chief financial officer Basil Sgourdos said it had written down a further $315 million on its Byju’s investment. The company has invested $536 million in Byju’s since 2018.

“We have reported a markdown in Byju’s carrying value. That’s really just driven off the numbers that we’ve received and digested, and assessing those against what we originally thought the business might do. It doesn’t necessarily reflect the long-term view of the business," Sgourdos said at an earnings call.

Prosus also mentioned paper losses on its investments in PharmEasy, but did not specify the fresh valuation. A paper loss signifies a temporary fall in the investment’s value that is reflected in the financial statements, but is not realized.

Edtechs in India have struggled as the post-pandemic reopening curbed demand for online learning. Companies including Byju’s, UpGrad and Unacademy have fired thousands of staffers over the past year as they try to shrink costs in a funding winter.

The markdown in valuation comes at a time when Byju’s needs to urgently raise $120-130 million for working capital requirements, including vendor payments.

Earlier in November, Byju’s filed its 2021-22 financial statements, reporting revenues in the core K-12 business of 3,569 crore, down from 1,552 crore in the previous year. It said its losses at the Ebitda (earnings before interest, taxes, depreciation and amortization) level for the core business amounted to 2,253 crore, down from 2,406 crore a year earlier. These financials do not include revenues and losses of any of its subsidiaries and were due to be filed in September 2022.

Prosus also marked down the value of its 13% stake in PharmEasy.

“The other one was a writedown in PharmEasy of about $118 million. That was driven by the need for PharmEasy to raise money to settle debt that was maturing, and we participated in that round, which expresses our confidence in the business going forward," Sgourdos added. The executives declined to comment on the valuation of PharmEasy on Prosus’ books.

Prosus reported revenues of $2.6 billion for the first half of 2023-24, up 118% from a year ago. It also witnessed growth across its various businesses, and from a majority of Indian startups it is invested in.

However, the investment firm reported a “significant fall" in its internal rate of return (IRR) across its portfolio, at just 5% during April-September 2023, compared with 18% in the corresponding period of 2022, because of a few large “underperformers", according to the investor presentation.

The tech investor also said Swiggy is doing really well and has improved profitability. Fintech PayU is likely to be in “listing form" in the second half of 2024, Tu said, terming it “a gem in our portfolio with real momentum".

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Ranjani Raghavan
Ranjani Raghavan writes about the Indian investment ecosystem with a focus on venture capital, private equity and startups. Outside of work, she enjoys sketching and birding. You can find her @ranjanir_
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Published: 29 Nov 2023, 03:18 PM IST
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