Prosus' dilemma: Is $500 mn an acceptable price to end its Byju’s headache?

In a surprising turn of events last week, edtech major Byju’s initiated a rights issue at an astounding 99% discount compared to its last post-money valuation of $22 billion. Byju’s aims to raise about $200 million through this issue—a crucial financial boost to address the liquidity challenge the company is currently facing.

A rights issue is typically employed by financially strained companies, allowing them to issue new shares at a discounted rate for a specified period. This provides existing shareholders with the opportunity to invest further. Often, companies resort to rights issues as a means to repay debts.