Summary – Netherlands-based Prosus Invests in BYJU’S
• Prosus, a Dutch company, has reduced its investment in BYJU’S to zero.
• The company owns over 10% (9.6%) of BYJU’S, an edtech firm in Bengaluru.
• Prosus invested around $536 million in BYJU’S since 2018.
• HSBC, a banking giant, has given no value to Prosus’ 10% stake due to legal cases and funding crunch.
Prosus, located in the Netherlands, has wiped out its entire investment in BYJU’S, an edtech business in Bengaluru. According to a recent filing, Prosus owns over 10% (9.6%) of the education technology firm.
“We reduced BYJU’S to zero at the conclusion of FY24. The fair value written down for FY24 was $493 million.
To provide background, Prosus has invested around $536 million in BYJU’S since 2018. At BYJU’s highest valuation of $22 billion, Prosus’ 9.6% ownership would be worth around $2.2 billion.
The new situation comes just after banking giant HSBC put considerable doubt on the viability of BYJU’S, giving no value to Prosus’ approximately 10% ownership in the company.
“We assign zero value to BYJU’s stake amid multiple legal cases and funding crunch,” HSBC wrote in a report on May 21.
The investment group has spent more than $500 million in the edtech firm, and this write-off comes at a time when the company is facing a number of obstacles, including continuing legal issues.
In a recent report, banking company HSBC valued Prosus’ 9.6% ownership in Byju’s at zero. It continued: “We assign zero value to Byju’s stake amid multiple legal cases and funding crunch.” It stated in the note: “Previously, we valued around 10% stake in Byju’s by applying an 80% discount to the latest publicly disclosed valuation.”
The edtech business was originally valued at $22 billion, but in November of last year, Prosus reduced its worth to less than $3 billion. In January of this year, US-based asset management BlackRock reduced Byju’s valuation to $1 billion as of October 2023.
Last Monday, Byju’s filed an appeal with the Karnataka High Court contesting the NCLT judgment, which precludes the business from advancing with its second rights issue. On June 12, the NCLT urged Byju’s to maintain the status quo regarding its holdings.
Earlier this month, Byju’s Alpha Inc.’s ad hoc group of term loan lenders announced that certain term loan holders and GLAS Trust Company LLC (as administrative and collateral agent of the term loans) had filed a Chapter 11 petition in the US Bankruptcy Court against Epic!, Neuron Fuel (DBA Tynker), and Tangible Play (DBA Osmo), the three US-based guarantors of the term loans.
The new situation comes just after banking giant HSBC put considerable doubt on the viability of BYJU’S, giving no value to Prosus’ approximately 10% ownership in the company.
“We assign zero value to BYJU’s stake amid multiple legal cases and funding crunch,” HSBC wrote in a report on May 21.
BYJU’S has been dealing with flames on several fronts, including a growing debt crisis, potential mass layoffs, delayed wages, a cash shortage, and a slew of litigation and bankruptcy proceedings launched by its investors and vendors.
CONCLUSION : Prosus, a Dutch company, has reduced its investment in Bengaluru’s BYJU’S to zero, owning over 10% of the edtech firm. The company has invested around $536 million since 2018, with a fair value of $493 million. This comes after HSBC questioned BYJU’S’s viability, assigning no value to Prosus’ stake.
