Byju’s is facing trouble raising the full $200 million from its rights issues, with the company’s founder having previously claimed that the first rights issue was oversubscribed. Now, India’s National Company Law Tribunal has restrained Byju’s from proceeding with its second rights issue pending allegations of oppression and mismanagement by its shareholders. The Tribunal ordered the company to maintain status quo on its existing shareholdings until a petition filed by two investors, General Atlantic and Sofina, was dealt with.
Byju’s had launched its first rights issue in late January, but a court order directed the company to refrain from tapping the funds raised through that rights issue following opposition from many investors. The startup’s valuation decreased significantly to about $25 million, down from $22 billion.
Byju’s recently attempted to raise money again from another rights issue to pay employees and continue operations, but the effort has now been halted. Rights issues allow companies to raise capital by offering shareholders the opportunity to purchase additional shares at a discounted rate, proportionate to their current stake.
This latest development marks another step in Byju’s remarkable collapse, once the world’s most valuable edtech startup. Backed by influential investors, including BlackRock, Prosus, Peak XV, and many others, Byju’s fortunes began declining some time ago, following the pandemic’s post-tailwind. Last year, however, the startup’s plight worsened significantly, when Prosus, Peak XV, and Chan Zuckerberg Initiative resigned from Byju’s board, citing governance concerns, and Deloitte dropped the company’s account.
Some investors, including Prosus and Peak XV, have accused Byju’s of violating an earlier court order and allotting shares to some shareholders despite their pending case.
