Byju's To Raise Funds Through Rights Issue At USD 250 Million Valuation

The online learning platform Byju’s is planning to raise funding of USD 200 million through equity rights issue at valuation in the range of USD 220-250 million. According to sources, the company is planning to offer equity at low valuation only for this tranche of issue.

“The board of Think and Learn Private Limited (TLPL) today launched the raising of funds USD 200 million by way of a rights issue to all its equity shareholders to support its ongoing efforts to drive growth and achieve operational sustainability,” the ed-tech platform said in a statement.

The issue is set to close towards the end of February. While the valuation of the firm is much higher, this low valuation has been put forward by the company for rights issue only. The valuation of the company peaked in March 2022 when the demand for online education was high due to the Covid-19 pandemic, and the competition in the sector was limited.

“As the largest shareholders, the founders of BYJU'S have already demonstrated their commitment to the company by personally investing more than USD 1.1 billion in the last 18 months,” the statement added.

The reason behind this funding round is to fund the ongoing capital expenditure and support general corporate purposes, Byju's said in its statement. In a letter addressed to the shareholders, founder Byju Raveendran said that the company is now less than a quarter away from achieving operational profitability due to the resilience of its business model.

Insolvency Petition With NCLT

A major chunk of the lenders who loaned Byju’s the USD 1.2 billion Term Loan B (TLB) moved the National Company Law Tribunal (NCLT) Bengaluru with an insolvency petition. While the filing has not been made public yet, Byju's has termed the claims as “premature and baseless”.

The petition in the NCLT has been filed by over 80 per cent of the lenders who were a part of the term loan, just as the ed-tech company claimed to be negotiating with the TLB lenders to settle the entire debt by raising funds from the sale of a couple of subsidiaries.

On the petition, a Byju's spokesperson said, “As we have stated before, the validity of lenders' actions, including acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court. Hence, any proceedings by lenders before NCLT are premature and baseless.”