Cash-strapped BYJU’s to raise $200 million via rights issue

Battling crises on all fronts, India's ed-tech major BYJU's parent Think and Learn Private Ltd (TLPL) today launched a fundraising programme worth $200 million by way of a rights issue, in which all its equity shareholders can participate.

The company says the rights issue aims to fund its capital expenditure and general corporate purposes. "The rights issue enables existing shareholders to participate in BYJU’S growth journey."

The founders of BYJU's, as the largest shareholders, have invested more than $1.1 billion in the company in the last 18 months, the company says.

Addressing the shareholders, the BYJU's co-founders acknowledged the “challenges” the company faced in recent months. But they say over the last many months, “strategic measures” have been taken to optimise costs. 

Stressing the importance of raising capital to create a glide path for strong shareholder value and prevent further value impairment, the letter to the shareholders highlights their "integral" role. Byju Raveendran, founder, BYJU’s, says: “This rights issue is about those who care the most about BYJU'S stepping up as we continue to turn the company around.” 

He says along with being a founder, he is also the largest investor in the company. “The funds raised will be exclusively utilised to clear immediate liabilities and meet operational requirements while maintaining the current rights of our valued shareholders. I am also happy to share that BYJU'S is now less than a quarter away from achieving operational profitability, reflecting the effectiveness of our strategic initiatives and the resilience of our business model.”

The current development comes after foreign lenders of BYJU's filed an insolvency plea against the company before the National Company Law Tribunal's (NCLT) Bengaluru bench last week. They have collectively extended over 85% of BYJU's entire $1.2 billion Term B loan. 

BYJU's termed the lenders' actions as "premature and baseless" and questioned the timing of the proceedings, saying it coincided with the start of the rights issue by its parent Think & Learn. 

Over the past two years, the homegrown ed-tech company has been battling problems on all fronts -- from crash crises to mass layoffs to the violations of FEMA (Foreign Exchange Management Act) rules. Recently, BJU's warned about its ability to "continue as a going concern" in the wake of mounting losses and legal issues. 

The company recently said accumulating losses and uncertainty over the outcome of the litigation related to the $1.2 billion Term Loan B facility indicate “a material uncertainty”. It “may cast significant doubt on the company’s ability to continue as a going concern," said BYJU’s.

Byju Raveendran-led company, in the latest filing of its audited FY22 financials with the Finance Ministry's Registrar of Companies (RoC), reported a manifold increase in losses worth ₹8,245 crore for the said fiscal year, primarily driven by mounting losses in its two units -- White Hat Jr and OSMO.

Notably, in a huge setback to BYJU's, U.S.-based global asset manager BlackRock this month cut the value of its stake in India's foremost ed-tech major to $1 billion from $8.4 billion in May 2023. The current drop in the valuation is a staggering 95% for a company that was valued at $22 billion in early 2022.