Byju's valuation takes a hit, slashed to $5.1 billion: Report

Dutch-listed technology investor Prosus, the largest stakeholder in Indian edtech major Byju's, has once again reduced the fair value of its investment in the edtech startup, according to its annual report released on June 27. Prosus stated that it had lost "significant influence" over Byju's during the year, leading to a loss of board representation. The current valuation of Byju's is now reported to be $5.1 billion, posing challenges for India's most valuable startup.

The change in valuation can be traced back to September 2022 when Prosus began classifying Byju's as a non-controlling financial investment instead of an associate, as its shareholding fell below 10 percent. This change in classification resulted in a different valuation approach. In November 2022, Prosus lowered the fair value of Byju's to $5.97 billion. Now, Prosus values its 9.6 percent stake in Byju's at $493 million for the financial year ending March 31, representing a decrease from the previous fair value.

Prosus has invested $536 million in Byju's since 2018. The markdown of Byju's by Prosus was disclosed in the annual report, which comes on the heels of the resignation of Russel Deisenstock, Prosus' representative on Byju's board. Two other board members, GV Ravishankar from Peak XV Partners (formerly Sequoia Capital India) and Vivian Wu from the Chan Zuckerberg Initiative, also stepped down due to disagreements with founder Byju Raveendran on operational matters.

Currently, Byju's board consists of only three members, all of whom are founders and members of Raveendran's family. Additionally, Byju's statutory auditor Deloitte resigned recently due to differences over delayed financial statements for FY22. Deloitte was replaced by BDO (MSKA & Associates) as the new statutory auditors of Byju's. Moreover, Byju's offices were searched by the Enforcement Directorate (ED) under the Foreign Exchange Management Act, and the company has yet to file audited results for FY22.

Byju's has informed investors that it will file its 2022 audited earnings by September and 2023 results by December, according to a Reuters report. In FY21, Byju's reported increased losses exceeding Rs 4,500 crore, despite benefiting from growth opportunities in the online learning sector amid the Covid-19 pandemic.

In May, lenders accused Byju's of concealing $500 million, while Byju's filed a counter suit in a New York court challenging the acceleration of the $1.2-billion loan it raised in November 2021. These developments add to the challenges faced by Byju's as it navigates financial and governance issues.