The board of Think and Learn, the parent company of Byju’s, on Monday, launched a rights issue to raise $200 million from its existing investors. The issue will be open for subscription for 30 days. In a letter sent to the shareholders, founder and CEO, Byju Raveendran informed them about the board’s decision to raise capital through the rights issue mechanism.
The issue will happen at a post-money valuation of $220-250 million, which is 99% lower than the company’s last funding round which happened at a valuation of $22 billion, sources said.
The company expects most existing investors, including founder Byju Raveendran, to participate in the round. Rights issues are typically valued much lower than the fair market valuation of a company to attract existing investors.
The issue comes at a time when the edtech firm is facing an acute cash crunch and lenders and vendors have dragged it to the National Company Law Tribunal under the Insolvency and Bankruptcy Code.
In his letter to the shareholders, Raveendran drew 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 bludgeonings of chance, My head is bloody, but unbowed,” Raveendran wrote.
“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,” he said in the letter. Raveendran added that the company’s board believes it is imperative that the company raises capital in order to deliver strong shareholder value.
“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.