Byju’s $200 Million Rights Issue Fully Subscribed Ahead of EGM

Byju Raveendran, the founder of Byju’s, is set to invest approximately $45-$46 million in the rights issue to maintain his shareholding in the company. This strategic move reflects his commitment to the company’s growth and his confidence in its future prospects.

The edtech firm Byju‘s recently conducted a rights issue to raise $200 million. Despite the company’s valuation being cut by 99%, indicating a significant reduction in its estimated worth, the rights issue was fully subscribed. This suggests that investors still have confidence in Byju’s and its future growth prospects, despite the valuation adjustment.

Byju Raveendran, the founder of Byju’s, has reportedly committed to investing $45-$46 million in the rights issue. This decision demonstrates Raveendran’s confidence in the company and his commitment to preserving his shareholding stake.

Byju‘s largest investors have initiated an extraordinary general meeting (EGM) scheduled for this Friday, with the objective of removing the company’s leadership and restructuring its Board.

In the notice sent by these investors, allegations of financial mismanagement, value erosion due to the management’s failure to enforce the company’s legal rights, and concealment of material information have been raised. These claims suggest a significant level of dissatisfaction with the current leadership and governance practices within Byju’s.

The request for an extraordinary general meeting (EGM) is backed by a consortium of Think & Learn (T&L) shareholders. This request follows previous notices of requisition sent to the T&L board of directors in July and December 2023, which were reportedly ignored.

The resolutions proposed for consideration at the EGM include addressing governance, financial mismanagement, and compliance issues within the company. Additionally, the investor group seeks to reconstitute the board of directors to ensure it is no longer controlled solely by the founders of T&L. Furthermore, there is a call for a change in the company’s leadership.

According to a Moneycontrol report, these shareholders have until February 29 to participate in the issue, failing which they risk significant dilution of their stakes in the company.

In a letter addressed to investors, founder and CEO Byju Raveendran expressed gratitude for the full subscription of the rights issue and emphasized the importance of all shareholders participating in the renewed mission. Raveendran highlighted that the success of the company is contingent upon the collective efforts of all shareholders. He acknowledged the foundational role that initial investments played in the company’s journey and emphasized that the rights issue will help preserve and enhance value for all shareholders.

By stressing the importance of shareholder participation, Raveendran underscores the collaborative nature of the company’s growth and the shared interest in achieving long-term success.

In his communication to shareholders, Byju Raveendran acknowledged that participating in the rights issue might appear to be a difficult decision. However, he emphasized that it is the only viable option available to prevent permanent value erosion. Raveendran invoked the words of Abraham Lincoln, stating, “A house divided against itself cannot stand,” underscoring the importance of unity and collective action.

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