Byju’s valuation slashed to under $3 billion by tech investor Prosus

In yet another huge blow to Byju's, once the poster child for India’s booming startup economy, tech investor Prosus has cut its valuation to under $3 billion, 86 per cent less than its peak valuation of $22 billion in 2022.

The disclosure, made by interim CEO Ervin Tu during Prosus earnings call, came days after the edtech startup announced a ₹2,250 crore loss.

“We are not disclosing the (exact) valuation but it is sub-$3 billion,” said Tu. “We are in close discussions with the company every day. Byju’s is faced with multiple challenges.”

Prosus has said in July that the company's management regularly disregarded advice despite efforts by the Dutch-listed tech firm's former director to improve governance.

Prosus listed Byju’s among the India portfolio firms that were “large underperformers” impacting its internal rate of return (IRR).

Also, late last year, Prosus said it had ceased equity accounting of Byju’s as it had lost “significant influence” over the firm after its holding slipped below 10 per cent.

Boom to doom

After a dramatic expansion during the COVID pandemic when classes shut down, it had acquired several edtech startups in India and the US. The company was trying to expand rapidly.

But as growth slowed when classes in schools resumed, Byju's has been struggling with cash-flow problems and is embroiled in a dispute with creditors over a $1.2 billion loan.

Over the past year, shareholders including Prosus and Blackrock have cut Byju's valuation to $11 billion in March, $8 billion in May and $5 billion in June, media reports said.

Byju's had delayed filing its 2021-22 financial results by nearly a year, prompting the auditor Deloitte and three board members to quit. Its chief financial officer and chief technology officer also quit last week.

Creditors sued Byju's this year after it breached covenants on a $1.2 billion loan. And, top shareholders in Byju have demanded the firm meet certain conditions before they consider any future capital infusion.

They also want founder Byju Raveendran to loosen his control over day-to-day operations.