The Chan Zuckerberg Initiative, Peak XV Partners, and Prosus acknowledged on Friday that its representatives had left Byju’s, the most valued company in India, board of directors. The biggest online store in the nation, Byju’s, is also coping with Deloitte’s departure as its auditor this week. The board members’ resignations occurred soon after global auditing firm Deloitte told the startup’s board that it was resigning from its position. Byju’s vehemently refuted the resignations on Thursday. The edtech juggernaut has reportedly failed to submit financial statements for the fiscal year ending March 2022, according to Deloitte, which was expected to work with Byju’s until 2025. Under a structured loan agreement, Byju’s has received $250 million from the US-based alternative investment firm Davidson Kempner Capital Management. The fundraising is taking place at the same time as a significant edtech company with headquarters in Bengaluru is apparently considering seeking more money. According to the Economic Times, which first reported the development, the acquisition was financed by a combination of non-convertible debentures (NCD) and a smaller number of compulsorily convertible debentures (CCDs) linked to Aakash’s final valuation for the upcoming IPO.
Peak XV Partners, formerly known as Sequoia India, announced that one of its partners, GV Ravishankar, had resigned from Byju’s board and stated that it was “committed to supporting the company for appointing an independent director to strengthen internal control systems and business procedures.” For its primary business operations, Byju’s got a $36.5 million collateral-free loan from its wholly-owned subsidiary Aakash in October of last year. Byju’s also managed to get an additional $250 million from previous investors, notably the Qatar Investment Authority (QIA). For the unicorn education technology business led by Byju Raveendran, this was the final equity round.
In a statement, a spokeswoman for Prosus said that Russell Dreisenstock had formally submitted his resignation as the board director representing MIH Edtech Investments, B.V. (a Prosus subsidiary) on the Think & Learn Private Limited board. The Company shall provide the resignation letter to the MCA in India within the time given. Byju’s has attracted public attention as a result of mass layoffs and ED raids for possible FEMA violations. Three premises that belonged to Raveendran and his company, Think & Learn Private Limited (Byju’s), were recently searched by the ED. However, according to Byju’s, the most recent visit by ED officials was related to a routine FEMA investigation.
The Chan Zuckerberg Initiative released a statement announcing that Vivian Wu had resigned from the Byju board. After the resignations, only the three co-founders of Byju, Byju Raveendran, Divya Gokulnath, and Riju Raveendran, remain on the board. According to a statement from a Byju’s spokeswoman, the company’s management is in contact with investors to reconstitute the board and that departing members departed because the value of their shares had dropped. BlackRock cut Byju’s valuation by almost half, to $11.5 billion, placing the biggest privately held company in the country in danger of a valuation reduction. The edtech business was valued at $5.97 billion by Prosus in its accounting entry dated November of last year.Despite valuation markdowns, the company appears to be finalising a $1 billion fundraising at its most recent valuation, which was $22 billion.
“A few investors’ shareholdings fell below the minimal level required by our SHA, forcing them to quit from their board seats and forcing reconstitution. We want to reassure everyone that we are actively working to create a board that is exceptional, varied, and appropriate for the size and scope of the company. Problems are getting worse at Byju’s, which is also the most valuable edtech company globally. According to a report on news station CNBC-TV18 that Byju’s later denied, India’s corporate affairs ministry opened an investigation into the company last week due to “various corporate governance lapses” there.
Byju’s revenues only increased by 4% in FY21, going from Rs 2,189 crore in FY20 to Rs 2280 crore in FY21. The company has not yet made its financial information for FY22 public. Losses surged by approximately 15X to Rs 4,564 crore in FY21 from Rs 305 crore in FY20, according to the company’s annual financial records submitted to the Registrar of Companies (RoC). According to the company, FY22 gross revenues were almost Rs 10,000 crore. Deloitte resigned on Thursday after not receiving “any communication” from Byju’s regarding the state of the “audit readiness of the financial statements and the underlying books and records for the year ended March 31 2022.” Byju’s faced increased scrutiny from the government, investors, and creditors last year as a result of its repeated failure to submit its financial statements. Byju’s eventually disclosed sales totals that were below its own projections in September when it released its financial results for the fiscal year that ended in March 2021.
