In a challenging turn of events, Byju’s, once celebrated as a symbol of India’s thriving startup landscape, is grappling with a financial crisis as its efforts to sell assets encounter obstacles. The edtech giant’s plan to offload assets, including Great Learning and Epic, has reportedly hit a roadblock primarily due to pricing concerns.
Byju’s aims to secure approximately $600 million from the sale of its higher education asset, Great Learning, but has yet to attract a buyer willing to commit to a binding term sheet. Additionally, the company has not received a binding offer for Epic, an asset deemed crucial in repaying Byju’s $1.2-billion loan, according to an ET report.
The challenges persist as Byju’s endeavors to seal a full-cash deal for Epic at $400 million, a task not expected to be easily accomplished, further complicating the company’s financial outlook. Byju’s is banking on the proceeds from the Epic transaction to sustain its daily operations.
To alleviate its financial strain, Byju’s initiated a rights issue on January 29 at a notably discounted pre-money price of $25 million – a staggering 99% reduction from its peak valuation. This move, aimed at raising $200 million, has, however, drawn criticism from investors, including Prosus and Peak XV Partners.
The situation took a legal turn as creditors filed a lawsuit against Byju’s for breaching covenants on a $1.2 billion loan. The ensuing standoff has cast a spotlight on founder Byju Raveendran, whose remarkable journey from a tutor to the head of India’s most valuable tech startup had previously captivated investors.
During the peak of the pandemic, Byju’s witnessed a surge in demand for its services and aggressively invested to meet the needs of remote learning as schools and universities closed their physical doors. Once a prominent sponsor of India’s national cricket team, Byju’s expanded its reach globally by acquiring multiple firms in the United States and elsewhere.
However, as classes resumed and growth slowed, the company’s challenges escalated, exacerbated by the prolonged legal dispute that shows no signs of abating. Byju’s now finds itself at a critical juncture, navigating financial hurdles and seeking viable solutions to restore its former glory.
