US-based asset management company (AMC) BlackRock has cut the fair value of its equity holding in edtech firm Byju’s by about 62% to $8.4 billion. This is the second instance of BlackRock marking down its shareholding in Byju’s after the first time in October last year. The AMC had originally invested in Byju’s at a $12-billion valuation in 2020. According to filings with the Securities and Exchange Commission (SEC), the AMC’s 2,279 shares in Byju’s have been valued at $8.4 billion at the end of FY23.
It was in November 2021, that Byju’s valuation soared to $22 billion as it last closed a large Series F funding round of more than $700 million from investors such as Chan Zuckerberg Initiative, GenGlobal Bright Corp, Edelweiss, Verition Fund, XN Exponent Holdings, MarketX Ventures and others.
Other investors, too, have pared the fair value of the edtech firm. Last September, Netherlands-based venture capital firm Prosus pegged the fair value of its 9.67% investment in Byju’s at $578 million or a valuation of just around $6 billion. As the funding winter persists and startups continue to report losses, investors both globally and domestically are paring valuations of their investments in startups.
Experts say that if the slowdown in funding continues, there could be more valuation markdowns in future. FE had reported earlier that Indian unicorn founders and their lead investors will have to consider pruning the valuations for future deals given many public market peers have already witnessed massive valuation corrections. The markdowns come at a time when Byju’s has been under the Enforcement Directorate’s (ED’s) radar for alleged violation of the Foreign Exchange Management Act (Fema).
The edtech firm has also been in the news for multiple rounds of layoffs and for questionable accounting practices, which received scrutiny from its own financial auditor. According to ED’s statement late last month, the investigation was initiated based on complaints from various individuals. Reports indicated the ED has also reached out to Byju’s lenders seeking more information on the edtech firm’s existing term loan and other related transactions.
Despite these setbacks, Byjus raised $250 million in a fresh funding round from US-based investment firm Davidson Kempner on May 13. The fresh round is part of a $700-million fundraising, which is pegged at a flat valuation of $22 billion. The funds will bring relief as it has been working on repayments of a large $1.2-billion term loan B (LTB) with a five-year tenure that it secured in November 2021. In December last year, a group of lenders that participated in the term loan offering renegotiated the terms of the debt, including faster repayment of part of the loan. Byju’s has raised more than $5 billion to date. It also mopped up a $250-million funding round from Qatar Investment Authority (QIA) at a flat valuation of $22 billion in November 2022 in which a few private equity investors participated.
Follow us on Twitter, Facebook, LinkedIn