Byju's Says $200 Million Rights Issue Fully Subscribed, Board Rejig Soon

Byju's says its $200 million rights issue stands fully subscribed, but its eponymous founder urged all investors to take part in the issue.

Chief Executive Officer Byju Raveendran conceded that participating in this rights issue "may seem like a Hobson’s choice". "However, this is the only viable option in front of us today to prevent permanent value erosion."

"Our rights issue is fully subscribed, and my gratitude to my shareholders remains strong," Raveendran said in a letter to shareholders on Tuesday night. "But my benchmark of success is the participation of all shareholders in the rights issue.

"We have built this company together, and I want us all to participate in this renewed mission. Your initial investment laid the foundation for our journey, and this rights issue will help preserve and build greater value for all shareholders," he said in the letter, a copy of which has been seen by NDTV Profit.

As the largest shareholder and provider of capital to Byju's, it would have been in his best interest to price this rights issue high, according to Raveendran. "But that would not be in the best interest of the company. I have always placed my interests aside when I deal with our company."

"This $200 million raise will give our company the capital it needs to ensure that we can take care of the current liabilities and also provide sufficient growth capital to get us back to our former glory," the letter said.

Raveendran also agreed to increase shareholder representation on the company board. "I commit to restructuring the board and appointing two non-executive directors to the board by the mutual consent of the founder and shareholders; right after the FY23 audit, which we expect to close by the end of this quarter," he said.

Byju's will appoint a third-party agency for transparency and monitoring with regard to the usage of funds raised through the rights issue. This agency will report to all shareholders on a quarterly basis, within 45 days from the end of the quarter, along with commentary from the board.

Raveendran's reach-out comes weeks after several investors, including Prosus, issued a notice for an extraordinary general meeting to Think & Learn Pvt. shareholders to meet and discuss the resolution of the company's outstanding governance, financial mismanagement and compliance issues, the reconstitution of its board of directors and a change in the company's leadership.

Byju's board currently comprises only Raveendran, wife Divya Gokulnath and his brother, Riju Raveendran.

"A few vested interests are misrepresenting our relationship as adversarial. Let me be unequivocal in stating that such narratives could not be further from the truth," Raveendran wrote.

He claimed that the traffic on Byju's website and apps showed "remarkable" growth in spite of reduced marketing spends in the recent past.

"The negativity has affected perception of the brand, but consumer belief continues to grow. We are launching Byju's Wiz, an AI-powered tool designed to be a true study companion for students.... Brand Byju's is not just alive, it is also kicking," he said.