Think & Learn Pvt Ltd (TLPL), the parent company of edtech firm Byju’s, plans to raise $200 million through a rights issue, valuing the company at less than $250 million post-issue—a stark contrast to its peak valuation of $22 billion in March 2022.
In a statement, the beleaguered firm announced,
“The TLPL board launched the fund-raising of $200 million via a rights issue for all equity shareholders today (Monday) to support ongoing growth initiatives and achieve operational sustainability.”
Byju’s Plans Strategic Move with Rights Issue Despite Low Initial Valuation
It has come to light that the conservative valuation of $200-250 million is limited to this phase of the issue, set to conclude by the end of February. Sources reveal that the true valuation surpasses $200-250 million; the deliberate lower pricing of the rights issue aims to attract participation from all existing investors. Anticipated subscribers include most current investors, including founder Byju Raveendran.
In a notable shift earlier this month, Blackrock, an early investor in Byju’s, revised its valuation downward to less than $1 billion. The company intends to utilize the generated funds to support ongoing capital expenditure plans and address general corporate needs.
Byju’s Founders Showcase Strong Commitment with Personal Investments of Over $1.1 Billion
The company statement asserts, “The founders of Byju’s, as the largest shareholders, have already showcased their commitment to the company by personally investing more than $1.1 billion in the last 18 months.”
In preparation for the rights issue, Raveendran, the founder, penned a letter to shareholders, providing insights into the forthcoming offerings.
“We believe an expeditious capital raise will furnish the company with the resources needed to rebuild and scale. These funds shall be utilized for the continuation of business operations, managing obligations, and enhancing the company’s overall sustainability,”
Raveendran emphasized the crucial need for this capital raise to avert any additional value impairment and to empower the company with the essential resources to fulfil its mission. He pointed out,
“It has been 21 months since our last external capital raise, during which we have trimmed our burn and transformed into a lean organization.”
Byju’s Nears Operational Profitability Milestone with Effective Strategic Initiatives
The company is now within striking distance, less than a quarter away, from achieving operational profitability. This milestone reflects the success of the company’s strategic initiatives and the resilience embedded in its business model.
Recently, Byju’s disclosed its financial results after a delay of about 22 months, revealing a widened operational loss of Rs 6,679 crore in 2021-22. This increase is primarily attributed to losses incurred by subsidiaries White Hat Jr and Osmo. In contrast, the company posted an operational loss (EBITDA) of Rs 4,143 crore in 2020-21. Notably, its revenue more than doubled, reaching Rs 5,298.43 crore in 2021-22, compared to Rs 2,428.39 crore in the previous fiscal year.