February 18, 2024
Byju's Plans $200 Million Rights Issue Amid Financial Challenges
Finance Business

Byju’s Plans $200 Million Rights Issue Amid Financial Challenges

Byju’s Plans $200 Million Rights Issue Amid Financial Challenges /Reuters

Byju’s Plans $200 Million Rights Issue Amid Financial Challenges

Indian ed-tech startup Byju’s announced a $200 million rights issue of shares to address immediate liabilities and cover operational costs. The company, facing financial challenges and undergoing negotiations for the repayment of a $1.2 billion term loan, aims to stabilize its business. Backed by investors like General Atlantic, Prosus, and Silver Lake, Byju’s did not disclose details regarding shareholders approached, pricing, or the timeline for completing the fundraise. The move follows setbacks, including lenders initiating bankruptcy proceedings. Byju’s is reportedly seeking over $100 million from existing shareholders at a significant discount to its 2022 valuation of $22 billion.

Financial Challenges Mount for Byju’s Amid Valuation Declines

Byju’s faces a series of challenges, including lenders initiating bankruptcy proceedings and negotiations for loan repayment. Recent valuation downgrades by BlackRock and Prosus have significantly reduced the company’s estimated worth. The startup had earlier received a notice from India’s financial crime-fighting agency regarding a fine related to alleged violations of foreign exchange laws. Byju’s plans to raise funds through a rights issue to address its immediate financial obligations and stabilize operations amid these challenges.

Rights Issue Strategy to Tackle Immediate Liabilities

By opting for a $200 million rights issue, Byju’s aims to secure funds for immediate liabilities and operational costs. The ed-tech company, supported by investors such as General Atlantic, Prosus, and Silver Lake, seeks financial stability amid ongoing challenges. The rights issue strategy involves offering existing shareholders the opportunity to purchase additional shares at a set price. This move comes as Byju’s grapples with financial pressures, including the initiation of bankruptcy proceedings and negotiations for loan repayment, highlighting the urgency to address immediate financial obligations.

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