Think and Learn Pvt. Ltd., the parent company of India’s leading edtech platform, Byju’s, is grappling with a shareholder revolt. Several major investors, including General Atlantic, Prosus Ventures, Peak XV, and Chan Zuckerberg Initiative, have issued a joint notice demanding an extraordinary general meeting (EGM) to discuss urgent changes in the company’s management, including the removal of co-founder and Chief Executive Officer Byju Raveendran.
This move comes after months of failed attempts by investors to engage with Byju’s management regarding persistent concerns related to corporate governance, financial mismanagement, and compliance issues. The shareholders took the decision to escalate the matter, issuing the EGM notice in what they claim is the best interest of both the company and its shareholders.
The resolutions proposed for the EGM are sweeping, addressing a range of issues from resolving outstanding governance challenges to reconstituting the Board of Directors with the aim of reducing founder control. Central to the proposed changes is a call for a new leadership at the helm of the embattled edtech giant.
Once valued at an impressive $22 billion in late 2021, Byju’s has since faced a significant downturn. The company is currently contending with mounting liabilities owed to vendors and employees, a consequence of the return to in-person learning as the economy reopens post-pandemic.
Last week, Byju’s attempted to raise $200 million through a rights issue from existing shareholders, valuing the firm at a post-money valuation of $225-250 million. The funds raised were intended to address the pressing financial challenges, including liabilities estimated at $125-$150 million. Shareholders who choose not to participate in the rights issue may face substantial erosion of their shareholding, with shares being offered at a mere 0.1% of its peak valuation in the last funding round.
Beyond financial woes, Byju’s is entangled in a legal battle with its $1.2 billion Term Loan B bondholders. The bondholders have taken legal action, citing a technical default linked to the company’s failure to timely file financial results for the period ending March 31, 2022. The company’s subsidiary, Whitehat Jr, is also involved in the legal dispute as it was unable to act as a guarantor.
As Byju’s attempts to navigate these challenges, it has been actively negotiating with bondholders while simultaneously exploring the sale of key assets, including US-based Epic and Singapore-headquartered Great Learning.
The filing of consolidated financials for the period between April 2021 and March 2022, after a delay of over 22 months, reveals a gloomy financial picture for Byju’s. The reported losses surged to ₹8,245 crore from ₹4,564 crore in the preceding year. However, consolidated income showed a significant increase to ₹5,298.43 crore in FY22, up from ₹2,428.39 crore a year ago.
With an extraordinary general meeting on the horizon and a future that hangs in the balance, the outcome of this shareholder revolt will undoubtedly shape the trajectory of Byju’s, once considered a flagbearer of success in the Indian startup ecosystem.
