In an expected turn of events for Byju’s, once India’s most valuable edtech startup, a coalition of investors voted to oust its founder and CEO, Byju Raveendran, during an emergency general meeting (EGM) held on Friday. Additionally, they lodged an oppression and management suit against the company's leadership to impede a recently launched rights issue, marking a surreal moment for the company.
During the EGM, which concluded earlier today, a consortium of investors, including Prosus Ventures and Peak XV Partners, opted to instigate leadership changes within the startup. As per an investor source familiar with the matter, the participating shareholders, amassing over 60% ownership in Byju’s, also endorsed the restructuring of the company's board. However, two individuals close to Byju’s have contested this ownership percentage, though no official statement has been released by either side to confirm the figures.
Raveendran and other board members were notably absent from the EGM on Friday. In a prior statement, Byju’s had asserted that its shareholders lacked the authority to effect leadership alterations within the edtech group.
In a statement provided by Prosus, one of Byju’s major investors, the shareholder group affirmed the unanimous passage of all resolutions proposed during the EGM. These included addressing governance, financial mismanagement, and compliance issues at Byju’s, restructuring the Board of Directors, and changing the company's leadership.
The statement continued by expressing confidence in the validity of the EGM's outcome, which the group plans to present to the Karnataka High Court in adherence to due process. Concurrently, four investors, representing approximately 25% ownership in Byju’s, filed a lawsuit at the National Company Law Tribunal seeking to halt the rights issue.
The decision on Friday follows more than a year of discontent among some of Byju’s major investors, who allege that the $22 billion Indian edtech startup has exhibited lax accountability practices.
In response to Friday’s developments, Byju’s raised doubts regarding the legitimacy of the resolutions passed during the EGM, citing the limited attendance of a "small cohort of select shareholders" and deeming their decisions "invalid and ineffective."
Byju’s, which has amassed over $5 billion in funding to date, expended more than $2.5 billion between 2021 and 2022 solely on acquisitions. Despite aiming for an early 2022 public listing through a SPAC deal valuing the Bengaluru-headquartered firm at approximately $48 billion, Byju’s was compelled to abandon its IPO plans due to market shifts.
For over a year, Byju’s has been pursuing new funding avenues. While it was in advanced discussions to secure about $1 billion last year, talks faltered following the sudden departure of auditor Deloitte and three pivotal board members representing Prosus, Peak XV, and the Chan Zuckerberg Initiative.
Subsequently, Byju’s raised less than $150 million in debt from Davidson Kempner and had to repay the full committed amount after encountering a technical default in a separate $1.2 billion term loan B.
Byju’s recently initiated a rights issue aiming to raise approximately $200 million at a significant discount. Raveendran urged existing investors to participate in the rights issue, emphasizing its role in preserving and enhancing shareholder value amidst challenging circumstances.