Prosus writes off $22 billion Indian edtech giant Byju’s to zero

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Prosus, one of Byju’s biggest investors, said on Monday its once $2.1 billion stake in the Indian edtech startup is now worthless but it still holds out hope the previously most valuable Indian startup can be saved.

Prosus, the largest outside investor in Byju’s with a 9.6% stake, said in its quarterly report that its stake in the startup is now zero “due to the significant reduction in value to equity investors.” Irvin To, Prosus Group CIO, said on an earnings call that the firm is still optimistic about Byju’s outlook but improving governance at the Indian firm will be key.

The Indian edtech giant has had a tough past few years, as it grappled with a series of financial and administrative setbacks that have tarnished its reputation and threatened its future. The startup’s troubles worsened last year, when it failed to meet financial reporting deadlines and ultimately reported revenues that were significantly below its own estimates.

The financial crisis was further compounded by the sudden departure of its auditor and board members, including a Prosus executive, and the scuttling of a potential $1 billion fundraising effort. In a desperate bid for capital, the startup raised $200 million this year, but at a much lower valuation of about $225 million to $250 million. This lifeline is also embroiled in legal disputes with some of Byju’s biggest backers, including Prosus.

Prosus, whose portfolio includes high-profile companies such as Tencent, Delivery Hero, Swiggy and Stack Overflow, has invested more than $570 million in Byju’s over the past few years. It has never sold any shares in the Indian edtech startup, whose valuation peaked at $22 billion in early 2022. Prosus said on Monday that its stake in Byju’s now represents a fair value loss of $493 million after adjustments in its current financial year.

Image Credit: Prosus (Screenshot)

Prosus has also cut the value of its other investments: It reduced the value of its stake in Stack Overflow, which it bought for $1.8 billion in 2021, by 39%, and its stake in Indian online pharmacy PharmEasy by 35%.

The firm’s readjustment of Byju’s stake comes after the world’s largest asset manager BlackRock also wrote off its stake in the Indian edtech startup. Prosus had complained last year that Byju’s “regularly disregarded its advice”.

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