In a surprising turn of events, Byju’s and Pharmaeasy, the stalwarts of India’s edtech and health-tech sectors, have emerged as the biggest underperformers in the portfolio of global technology investor Prosus. The half-yearly financial report for H1 FY24 reveals that both companies have recorded negative internal rates of return (IRR), with Byju’s at -24 percent and Pharmaeasy at a staggering -41 percent.
Byju’s, once valued at over $22 billion in October 2022, has faced a series of challenges, leading to a significant devaluation. The company’s valuation now stands at less than $3 billion, reflecting a $315 million markdown, according to a senior Prosus executive. This downward adjustment follows a period of liquidity crises, repayment struggles with stakeholders, and a series of top-level executive departures.
Prosus, which holds a 9.6 percent stake in Byju’s, had earlier pegged the fair value of its holding at $493 million in June, valuing Byju’s at $5.1 billion. This marks a substantial reduction from the last official valuation in October 2022. The technology investor attributes the markdown to current trading circumstances and emphasizes that it does not reflect a long-term negative view of Byju’s.
The challenges for Byju’s continue, with a Prosus representative stating, “Byju’s is more challenged, and the company is facing multiple headwinds. We and other shareholders are working every day to improve the situation. We are in close discussions with the company every day.” In a move signaling internal concerns, Russell Dreisenstock, Prosus’ representative on Byju’s board, resigned in July, citing issues with reporting and governance structures.
The situation is no brighter for Pharmaeasy, as Prosus has also marked down its valuation by about $118 million. The health-tech company is currently grappling with lender commitments, a delayed IPO, and a pending funding round. Reports suggest that investors have reduced its valuation by half, and Pharmaeasy is seeking a new round at a valuation up to 90 percent lower.
Despite these setbacks, Prosus reports profitable returns from other Indian firms in its portfolio. Swiggy, Eruditus, PayU India, Meesho, and Elastic Run have collectively contributed to the technology investor’s average IRR of 5 percent in H1 FY24. Notably, Prosus earned a profitable IRR of 7 percent from Swiggy, 22 percent from Eruditus, 30 percent from PayU India, 32 percent from Meesho, and 31 percent from Elastic Run during the same period.
As Byju’s and Pharmaeasy navigate challenging times, Prosus remains optimistic about its diverse portfolio, with promising returns from other key investments.
