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Netherlands-based tech investor Prosus on Monday said it has written off its 9.6 per cent stake in troubled edtech firm Byju’s involving a fair value loss of $493 million (Rs 4,115 crore).
“In the current financial year, the group wrote off the fair value of its 9.6 per cent effective interest in Byju’s due to the decrease in value for equity investors. A fair value loss of $493 million was recognised in other comprehensive income in the current year,” Prosus said in a statement on Byju’s impairment issued on Monday.
“In September 2022, the group lost significant influence in Byju’s as it no longer exerts significant influence over the financial and operating policies of the entity. The group recognised a gain on loss of significant influence of the associate of $22 million, including a reclassification of the accumulated foreign currency translation losses of $55 million. The group accounts for its 9.60% effective interest in BYJU’S at fair value through other comprehensive income,” it said.
Prosus is a global technology group with businesses and investments in growth markets around the world. It has also invested in Swiggy and several other Indian companies. It holds 32.6 per cent stake in Swiggy which is planning a Rs 8,000 crore plus IPO.
“India is a priority, and we are strengthening our teams and investments there. We will focus on backing local entrepreneurs to ensure we align well with India’s domestic priorities,” Prosus said.
The National Company Law Tribunal (NCLT) recently restrained Byju’s from going ahead with its second rights issue. The issue commenced on May 13 and was to end on June 13. The tribunal also directed Byju’s from utilising any funds that it has so far collected from the second rights issue, and the same needs to be deposited in a separate account.
The order was passed in an application filed by the investors of the company such as Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative and Prosus. The investors had filed a plea in the NCLT to halt Byju’s second rights issue as it would further dilute their holding in the company.
During the hearing, the investors alleged that Byju’s had not deposited the money it received from the rights issue prior to February 27 in the escrow account. They also alleged that it allotted shares to those who participated in the rights issue, overlooking the tribunal’s order to maintain status quo as far as the shareholding was concerned.
At an extraordinary general meeting (EGM) in February, a group of investors passed resolutions for the removal of Byju Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran from the company’s leadership. The validity of the resolutions is now before the Karnataka High Court. Despite laying off thousands of employees and making massive expenditure cuts over the past year, Byju’s valuation has been in free fall, and the company has defaulted on loans taken from US lenders.
