Edtech company Byju's shareholders approve $200 million rights issue

Edtech firm Byju’s said that the vote for an increase in authorised share capital put forth in the form of a postal ballot and the Extraordinary General Meeting (EGM) held on March 29, 2024, has been approved by a majority of 55 per cent of the total votes polled.

The voting process, which included both the EGM and a postal ballot that concluded on April 6, 2024, has been duly scrutinised by an independent third party.

The approval of the EGM proposals paves the way for Think & Learn Private Limited, the parent company of Byju’s, to issue fresh shares and conclude the rights issue aimed at tackling the liquidity crunch, including unpaid salaries, regulatory dues, and vendor payments. The company said that these delays were a result of irrational hostility from four foreign shareholders who chose frivolous litigation over constructive discussion.

“We are grateful to our investors for their support and understanding during this pivotal phase. Their invaluable support in providing essential working capital underscores their collective commitment to our renewed growth push,” said Byju Raveendran, founder and chief executive officer of Byju’s. “The shareholder approval marks a significant threshold in our relentless push to turn around the business beset with multiple challenges, which we are resolving one by one, slowly but surely,” he added.

An independent scrutiniser evaluated the process strictly with applicable laws, ensuring transparency and fairness.

While the successful rights issue provides Byju’s with the necessary financial resources, the company is currently unable to utilise the proceeds. A National Company Law Tribunal (NCLT) interim order, on a petition filed by four foreign shareholders, instructed the company to hold the funds received from the rights issue in an escrow account for now. The next hearing on the matter is scheduled for April 23.

Byju’s is grappling with another setback as it faces delays in paying salaries to employees. “The financial situation at Byju’s might improve once NCLT releases the rights issue funds from the escrow account,” said a company source.

The culmination of the rights issue will also set the stage for the launch of Byju’s 3.0, the suite of AI-first products. These are aimed at hyper-personalising education at a global scale.

Byju’s and its investors are fighting at the National Company Law Tribunal (NCLT) over the company’s rights issue of $200 million in a petition alleging oppression and mismanagement.

The four investors — Prosus, General Atlantic, Sofina, and Peak XV Partners (formerly Sequoia India & Southeast Asia) — had sought a stay on the rights issue at less than 99 per cent enterprise valuation compared to Byju’s peak valuation of $22 billion.