Big investors may favour Byju’s founder at EGM

The outcome of EGM can go either way. Byju Raveendran is obviously fighting back as the company has raised money recently through rights issue. So, some investors are supportive of his continuance, while some are not. We don’t know exactly who is supporting and who is opposing as of now - Shriram Subramanian, founder &MD, InGovern Research Services, tells Bizz Buzz

Bengaluru: The outcome of Friday’s EGM (extraordinary general meeting) can go either way with some big investors are likely to support Byju Raveendran against the bid of ouster him from the post CEO of Byju’s by some investors.

According to corporate governance officials and fund managers, Byju’s founder is fighting it hard to retain his position as CEO of the company despite bid to remove him from the post.

“The outcome of EGM can go either way. He (Byju Raveendran) is obviously fighting back as the company has raised money recently through rights issue. So, some investors are supportive of his continuance, while some are not. We don’t know exactly who is supporting and who is opposing as of now,” Shriram Subramanian, founder &MD of InGovern Research Services, a proxy advisory firm told Bizz Buzz.

Byju’s is going to hold a high-stakes EGM on Friday in which certain investors are looking at ousting Raveendran from his position. Their demand is to change the board along with the CEO for smooth operations of the company.

However, there are many early investors, who are supporting the Founder in this battle of survival of the company.

Meanwhile, the Enforcement Directorate (ED) has upgraded its Look out Circular (LC) issued against Byju’s founder and CEO Byju Raveendran in connection with a FEMA probe, seeking to stop him for going abroad.

The earlier such alert meant that immigration authorities had to just intimate the agency about his movements through various ports.

However, sources in the know said Raveendran is currently residing in Dubai and a look out circular against him doesn’t serve any purpose. “It’s like preventing him from coming back to India,” said source in the know.

Fund managers are of the opinion that Raveendran should be ousted from his position as a new CEO and board can salvage the situation at Byju’s.

“A new board and a new CEO are the only way out for Byju’s. Otherwise, they will not be able to raise money. Though the company has raised money through rights issue, it has happened at a too deep discount to previous valuation. Such litigation distracts the company because one side, there are regulators and on other side, there are investors (who are against the CEO).

So, it distracts the company from its normal operations,” V Balakrishnan, Chairman of venture capital fund, Exfinity Ventures & former CFO of Infosys, told Bizz Buzz. In a shareholder letter, its CEO Raveendran has said that Byju’s rights issue to raise $200 million has been fully subscribed. The company conducted the rights issue at a very low valuation as compared to its peak valuation of $22 billion.