Edtech giant Think and Learn, operating under the BYJU'S brand name, has secured a commitment of USD 300 million from investors for its ongoing rights issue, which is set to conclude by the end of February. Sources familiar with the matter disclosed this development.
In January, BYJU'S initiated a rights issue aiming to raise USD 200 million at an enterprise valuation ranging between USD 220-250 million, marking a significant decrease from its peak valuation of USD 22 billion.
Sources also revealed that BYJU'S offered to appoint two independent directors to address investor concerns regarding transparency. However, this would occur only after the conclusion of the rights issue and the declaration of financial results for the fiscal year 2023.
"Around USD 300 million in commitments have been received by BYJU'S for the rights issue as of the current date. Some investors have proposed expanding the size of the rights issue, but the company's primary focus is on successfully closing the existing issue," stated a source.
Negotiations are underway with disgruntled investors regarding their participation in the rights issue. Failure to invest could result in a nearly 50 per cent reduction in their shareholding.
"BYJU'S is engaged in discussions with dissatisfied investors. The company anticipates their participation; otherwise, their shareholding will significantly decrease," the source added.
Another source indicated that BYJU'S offered to appoint two independent directors to the board to improve transparency. However, this appointment is contingent upon the declaration of financial results for the fiscal year 2023.
"BYJU'S anticipates finalizing its financial results for FY 2023 within this quarter, ensuring full compliance with regulations. Subsequently, the company intends to appoint two independent directors to its board. This proposition is part of ongoing discussions with disgruntled investors who have called for an Extraordinary General Meeting (EGM) on February 23," the source elaborated.
The EGM notice, backed by investors including General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who collectively hold around 30 per cent stakes in BYJU'S, requests resolution of outstanding governance, financial mismanagement, and compliance issues, as well as the reconstitution of the Board of Directors.
Furthermore, investors, led by Dutch investment firm Prosus, stated in the EGM notice that they had previously requested board meetings in July and December, but their requests were disregarded.
Notably, BYJU'S investors lack voting rights concerning CEO or management changes as per the shareholder agreement.
A representative of one of the investors involved in calling the EGM expressed expectations for additional investors to join the February 23 meeting. Following this, they plan to approach the National Company Law Tribunal to seek the reconstitution of BYJU's board.
At the time of reporting, BYJU'S had not responded to a query regarding these developments.
(With PTI inputs)
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