Just days after troubled edtech firm, Byju’s launched a rights issue to raise $200 million from existing shareholders, its key investors are seeking to oust its top brass led by founder-CEO Byju Raveendran.
Staing that they are “deeply concerned” about future stability under the current leadership, the investors are seeking an extraordinary general meeting (EGM) to adopt resolutions on outstanding governance, financial mismanagement and compliance issues. The reconstitution of the board of directors, so that it is no longer controlled by the founders of Byju’s parent company Think & Learn, and a change in leadership of the company, is also on their agenda.
At present, the company’s board consists of founder and CEO Byju Raveendran, his co-founder and wife Divya Gokulnath, and his brother Riju Ravindran. Other members had quit last year.
Sources said the statement is on behalf of Prosus, Peak XV, Sofina, Lightspeed and General Atlantic. “This is the third time they are issuing an EGM notice. They don’t have the rights to enforce an EGM,” said a person close to the developments.
The person added that 6 of around 80 investors on the company’s cap table have indicated that they would participate in the rights issue. In a letter sent to the shareholders on January 29, Raveendran had informed them about the board’s decision to raise capital through the rights issue.
According to sources, Byju’s has reduced the monthly burn rate of its core business to Rs 50 crore and aims to achieve operational break-even in the next 2-3 months. Additionally, the company plans to reconstitute the board after completing the FY23 audit.
In the letter to shareholders, Raveendran had drawn parallels between the battles the company is going through to the struggles depicted in the verses of ‘Invictus’ by William Ernest Henley: “In the fell clutch of circumstance I have not winced nor cried aloud. Under the bludgeoning of chance, My head is bloody, but unbowed”.
“We believe an expeditious capital raise will provide the company with the resources it needs to rebuild and scale. This shall be used for the continuation of business operations, to manage obligations and to make the company more sustainable,” Raveendran said in the letter.
“This capital raise is essential to prevent any further value impairment and to equip the company with necessary resources to deliver on its mission,” he added. “It has been 21 months since our last external capital raise, during which we have cut our burn and worked to become a lean organisation, razor-focused on execution,” Raveendran said.
In the letter, Raveendran also revealed that the founders have infused over $1.1 billion of their personal funds into the company over the past 18 months. “We have made immense personal sacrifices for the sake of the company. We have spent our lives building this company and are fervent believers in its mission. Our enthusiasm and zeal continue unabated,” Raveendran said.
In November 2023, tech investor Prosus marked down the value of its stake in Byju’s, which resulted in the company’s valuation coming down to less than $3 billion. Recently, global investment management firm BlackRock, which holds less than 1% stake in Byju’s, cut down its valuation to $1 billion.
Last week, the company posted its FY22 financials reporting a consolidated revenue jump of 118% from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22. Its losses also shot up from Rs 4,564 crore in FY21 to Rs 8,245 crore in FY22.