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

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Nikhil Patwardhan

17 reads
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Nikhil Patwardhan

17 reads

Just 16 months ago, it appeared that Byju’s would go down as Prosus’s most successful Indian bet. Today, however, the investor is contemplating losing its entire $536 million investment in Byju’s as it sees little scope of turnaround under the current management

February 05, 2024

11 MINS READ

Key Takeaways

  • Prosus, Byju’s biggest institutional shareholder, has invested about $536 million in the company so far and holds a ~9% stake in the edtech
  • It now needs to pour another $18 million into Byju’s in the company’s upcoming rights issue to continue holding its stake
  • Given how much Prosus has already sunk into the company, investing this relatively small amount should not be a very difficult decision for Prosus.
  • Prosus, however, has little faith in Byju's managing a turnaround under the current management and, along with a clutch of other investors, has demanded the ouster of the Raveendran family from the company board

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. 

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