Byju Raveendran, founder and Chief Executive Officer of Byju’s, has offered its disgruntled investors an option to invest in the rights issue of the edtech company so that their shareholding is not diluted. Cash-strapped Byju’s parent company is raising $200 million by way of a rights issue to all its equity shareholders at a 99 per cent discount to the company’s peak valuation of $22 billion in 2022.
In a letter sent early on Friday, Raveendran informed shareholders that the company has secured more than 50 per cent votes through postal ballot – first announced on 7 March – to increase the authorised share capital to account for the $200-million rights issue.
“Despite the animosity shown by some of the investors in pursuing uncalled for legal actions, we continue to show good faith towards all our shareholders and would like all of you to be part of our turnaround story,” Raveendran said in a letter, a copy of which ‘Business Standard’ has seen. “In good faith, the board is considering making an offer of renounced shares to existing shareholders to ensure that there is no more dilution to their shareholding. We will share more details with you shortly.”
Raveendran said while the firm has received significant interest from third parties, its priorities remain with the existing shareholders. Hence, the firm is looking at how it can extend this opportunity to all of you.
“Even my critics know that I have invested my everything, and even more, into this company. I hope you will see the value in continuing with Byju’s in the same spirit with which you first joined our journey. I look forward to your response and to our continued partnership to transform the global educational landscape,” said Raveendran.
Byju’s held its extraordinary general meeting (EGM) to increase the authorised share capital of the firm on Friday morning. The shareholders raised no objection to the resolution to increase the authorised share capital of the company.
The meeting started at 10 am with approximately 20 investor representatives in attendance along with Byju’s Think & Learn management.
“The resolutions were called out and no objections were raised,” said a company source. “Contrary to media reports, none of the miffed investors attended the EGM personally to raise any of their concerns. They had sent their legal representatives.”
A source from the investor side said that authorised representatives of all investors were there. “Nobody boycotted it (unlike the management did with the last EGM) contrary to what’s being floated,” said an investor source.
The result of the voting including the postal ballot, will be revealed officially after the formal process on the same is over. It is expected to be closed on 6 April.
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 (formerly Sequoia) — 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. They fear that the rights issue would wipe out the value of their investments. The six investors jointly hold over 32 per cent stake in the company, according to the sources.
The National Company Law Tribunal (NCLT), Bengaluru, on Thursday, refused to stay Byju’s extraordinary general meeting (EGM) scheduled on Friday, 29 March, to increase its authorised share capital. If the company gets the majority votes, it can issue shares to new investors for the rights issue, according to the sources. Once new shares are issued, it cannot be reversed, and this is why the investors wanted to obtain a stay on the EGM. However, the tribunal refused to put a stay on the EGM and has now listed the case for hearing on 4 April, where other issues will also be addressed.
“On 4 April, Byju’s would argue before the NCLT that it has met all the parameters set by the tribunal and request them to release the funds from the escrow account so that it can pay salaries to the employees,” said a company source.
The NCLT in its order passed on 27 February directed Byju’s to keep funds received from the rights issue in an escrow account. This should be done till the disposal of the oppression and mismanagement petition filed against Byju’s by four of the company’s investors. Escrow refers to a third party that holds money or an asset on behalf of the other two parties in a transaction.
First Published: Mar 29 2024 | 7:13 PM IST
