BYJUS Receives $300 Million Commitment in Rights Issue

Edtech giant Think and Learn, operating under the BYJU'S brand name, has reportedly secured a $300 million commitment from investors for its ongoing rights issue. The rights issue, launched in January, aims to raise $200 million through equity rights at an enterprise valuation of $220-250 million, marking a significant 99% reduction from its peak valuation of $22 billion.

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Addressing Investor Concerns

In an effort to address concerns raised by disgruntled investors, BYJU'S has offered to appoint two independent directors to enhance transparency. However, this appointment will only take place after the rights issue is closed and the financial results for the 2023 fiscal year are declared. The company has also engaged in negotiations with miffed investors to encourage their participation in the rights issue, emphasizing that their shareholding could be reduced by nearly 50% if they choose not to invest.

Appointment of Independent Directors

BYJU'S has proposed the appointment of two independent directors to its board as part of ongoing discussions with disgruntled investors. This move aims to enhance transparency and address governance concerns. However, the appointment will only occur after the declaration of financial results for the 2023 financial year, which is expected to happen within this quarter. This step will ensure the company's full compliance with relevant rules and regulations.

Extraordinary General Meeting (EGM)

A group of BYJU'S investors, including General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who collectively hold approximately 30% stake in the company, have called for an Extraordinary General Meeting (EGM) on February 23. The EGM notice, backed by these investors, seeks to address outstanding governance, financial mismanagement, and compliance issues, as well as the reconstitution of the Board of Directors. Despite previous requests from the consortium of shareholders in July and December, the board of directors had disregarded their concerns.

Seeking Legal Recourse

BYJU'S investors do not have voting rights on CEO or management changes as per the shareholders' agreement. In light of this, a representative of one of the investors calling for the EGM expressed their expectation that more investors will join them in the upcoming meeting. Following the EGM, they plan to approach the National Company Law Tribunal for the reconstitution of BYJU'S board.

BYJU'S has not yet responded to queries regarding these developments.