Edtech major Think and Learn, which operates under BYJU'S brand name, is learnt to have received a commitment of USD 300 million from investors for its ongoing rights issue which will close by the end of February, sources aware of the development said.
Rights Issue Details and Valuation Adjustment
BYJU'S floated a rights issue in January to raise USD 200 million at an enterprise valuation in the range of USD 220-250 million which is a 99 per cent reduction in its peak valuation of USD 22 billion.
Sources also shared that BYJU'S has offered miffed investors to appoint two independent directors to enhance transparency but only after the rights issue and declaring its financial results for the 2023 fiscal.
"BYJU'S has received a total commitment of around USD 300 million for the rights as on date. Some investors have also suggested increasing the rights issue size but the priority for the company is to close the existing issue successfully," said a source.
The source said that the negotiation is also on with miffed investors for their participation in the rights issue.
Negotiations and Investor Participation
"BYJU'S is in discussion with miffed investors also. The company expects that they will also invest, otherwise their shareholding will reduce by almost 50 per cent," the source said.
Independent Directors Offer
Another source said that BYJU'S has offered to appoint two independent directors on the board to enhance transparency but the appointment can happen only after results for financial year 2023 are declared.
"BYJU'S expects to close the FY 2023 financial result in this quarter which will make the company completely compliant with the rules. Thereafter, the company will look to appoint two independent directors to its board. The proposal is part of ongoing discussion with miffed investors who have called for EGM (Extraordinary General Meeting) on February 23," the source said.
Shareholder Concerns and Extraordinary General Meeting (EGM)
According to a source, the EGM notice has been backed by General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who jointly account for around 30 per cent stake in BYJU'S.
The investors led by Dutch investment firm Prosus in the EGM notice requested the resolution of the outstanding governance, financial mismanagement and compliance issues and the reconstitution of the Board of Directors.
As per the notice, a consortium of BYJU'S shareholders had in July and December requested the board of directors for the meeting but it was disregarded.
Legal Action Threat and Future Steps
BYJU'S investors have no voting rights on the CEO or management change as per the shareholder's agreement.
Meanwhile, a representative of one of the investors who have called for an EGM said they expect more investors to join them in the upcoming February 23 EGM after which they will approach the National Company Law Tribunal for reconstitution of BYJU's board.
A query sent to BYJU'S in this regard elicited no immediate response.
