The curious case of Byju’s second rights issue

In January, beleaguered edtech Byju’s made a last-ditch effort to stay afloat. With its cash reserves running out, the Bengaluru-based company—once India’s most valuable startup—launched a rights issue to raise $200 million at a 99% discount to its last valuation of $22 billion. Typically used by financially troubled companies, a rights issue allows them to issue new shares at a discounted rate for a limited period, allowing existing shareholders to double down on their investments.

While Byju’s claimed the rights issue was fully subscribed, its hopes were dashed when many of its investors—including Prosus, General Atlantic, Peak XV Partners, and Sofina Ventures—refused to participate, stating they would only invest further if the management of Byju’s was changed. Their opposition saw the proceeds of the rights issues locked away in an escrow account while the National Company Law Tribunal, or NCLT, adjudicated the matter.

On the evening of June 13 when the Bengaluru bench of the NCLT convened for the latest hearing of the case, things got even murkier. Byju’s was accused of covertly launching a second rights issue even as its first remained in limbo.