Byju Raveendran to increase the stake in the company to 40%; raising funds to buyback to 15%

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Byju Raveendran, the founder and CEO of edtech powerhouse BYJU, is allegedly in discussions to raise money to boost his ownership in the business to as much as 40%.

According to a Bloomberg article, Raveendran would use the additional money to use his shares as security to purchase back up to 15% of the company. Currently, Raveendran owns around 25% of BYJU’S.

By taking part in a $800 Mn strategic fundraising round that he co-led with Sumeru Ventures, Vitruvian Partners, and BlackRock last year, Raveendran also boosted his share in BYJU’S. The startup’s founder made an initial $400 million investment before increasing his share to 25%.

There were rumours that BYJU’S was in talks with the private equity firm TPG in November of last year to raise $250 million to $300 million. In October, the edtech business secured $49 million from Byju’s Holdings 1 Pte Ltd, the parent company located in Singapore.

Although BYJU’S was valued at $22 Bn during its most recent investment round, those with knowledge of the situation informed the magazine that the repurchase may occur at a lesser valuation. They said that the financing negotiations with stockholders and lenders are still in the early stages and might potentially break down.

BYJU’S had a challenging year in 2022 as concerns were raised about its corporate governance, accounting and sales procedures, commercial plans, and more. Additionally, it was impacted by the slowdown in the edtech sector following the reopening of educational institutions and schools during the Covid-19 pandemic’s almost two-year-long interruptions.

In September of last year, BYJU’S finally released its financial data for FY21 after months of delays and reschedules. The edtech startup’s loss increased dramatically by 1,880% to INR 4,588 Cr in FY21 from INR 231.69 Cr in FY20, further casting doubt on its operations.

The edtech decacorn used layoffs to reduce costs, just like its competitors Vedantu and Unacademy and a number of other smaller edtech businesses. A major layoff of some 2,500 workers, or 5% of its staff, spanning the product, content, media, and technology departments, was announced in October of last year.

Additionally, according to Inc42’s layoff tracker, BYJU’S-owned WhiteHat Jr. let go of a total of 1,000 workers in 2022 to reduce cash outflow.

In the meantime, Raveendran recently informed BYJU’S staff through internal email that the firm plans to hire 10,000 more teachers in 2023 in an effort to expand its offline services.

The edtech business, formed in 2015, also has plans to go public shortly. Raveendran recently stated to Inc42 that BYJU’S, together with its subsidiaries Aakash and Great Learning, will start turning a profit on a stand-alone basis by the end of FY23.

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