Byju’s valuation drops to 62% in worth as BlackRock slashes the edtech giant’s valuation to $8.4 billion from a peak of $22 billion.
BlackRock, a US-based asset manager, holds a stake in Byju’s, estimated to be under 1 per cent. In the filing with the Securities and Exchange Commission (SEC) for the March quarter, BlackRock reported that it now values Byju’s at approximately $8.4 billion. This valuation represents a considerable decrease from Byju’s peak valuation of $22 billion in April 2022. BlackRock had previously reduced the valuation to $11.5 billion as of December 31, 2022.
As of March 31, 2023, BlackRock pegged the value of its 2,279 shares in the company at $4,043,471, estimating Byju’s fair value at $8.4 billion. This marked a significant decrease from the previous valuation of $22 billion in April 2022.
Response from Byju’s
Byju’s declined to comment on the valuation reduction by BlackRock. It is worth noting that BlackRock’s stake in Byju’s is under 1%. Additionally, Byju’s valuation process can vary among different investors. Byju’s, being a privately held company, does not disclose detailed information about its stakeholding and valuation.
Despite the reduction in Byju’s valuation, Byju’s has been actively raising funds. It is currently in the process of raising Rs 2,000 crore ($250 million) from Davidson Kempner Capital Management as part of an ongoing $1 billion funding round. Byju’s is seeking a mix of equity and structured instruments. It is in talks with existing and new investors.
But in the meantime, the decline in Byju’s valuation poses challenges for the company. A significant reduction may impact investor confidence and perceptions of the company’s financial health.
Byju’s management will need to navigate these challenges, address investor concerns, and focus on executing their strategic plans to regain momentum and build a strong future for the company.
Future Plans
Byju’s has been actively pursuing its growth plans despite its challenges. The edtech giant is planning an Rs 8,000-crore IPO for its subsidiary, Aakash. Aakash is a leading coaching institute chain acquired by the Unicorn for $1 billion in 2021.
Additionally, Byju’s is engaging in discussions with investors, including Abu Dhabi’s sovereign wealth fund ADQ, as part of its ongoing funding efforts. The company aims to raise $1 billion in the funding round, combining equity and structured instruments.
However, these are not the only challenge for the Unicorn edtech.
Byju’s Alpha, the company’s US entity, was sued by Glas Trust Company and investor Timothy R Pohl in Delaware. The lawsuit was filed against Byju’s Alpha, Tangible Play, and Riju Ravindran, who are associated with Think and Learn Private, the edtech firm founded by Byju Raveendran.
The lawsuit involves a dispute between creditors and Byju’s Alpha over company control, with accusations of hiding $500 million.
Also, the Enforcement Directorate (ED) conducted search operations at three Byju’s premises under FEMA, revealing foreign direct investments of approximately Rs 28,000 crore received between 2011 and 2023. Byju’s overseas acquisitions of around Rs 9,000 crore are also under scrutiny for compliance with foreign exchange regulations.
Byju’s decision to carry out the round of layoffs was part of its larger “optimization” strategy. The company had announced this strategy in the previous year, aiming to streamline its operations and improve efficiency. As a result, Byju’s made the difficult decision to let go of around 900-1,000 employees.
Byju’s is not the only unicorn company to experience a reduction in valuation.
Several other prominent startups, such as PharmEasy, Pine Labs, and Ola, have also seen markdowns in their valuations by different investors. Valuation adjustments are a normal part of the investment cycle, influenced by market conditions, financial performance, and investor sentiment. Startups must adapt to these dynamics, demonstrate resilience, and implement effective strategies to maintain growth and investor trust.
