Prosus Writes Off $493 Million Stake in Byju's Amid Legal and Financial Turmoil

Dutch-listed technology investment firm Prosus has written off its 9.6% stake in beleaguered edtech firm Byju's. In its annual report, Prosus stated that the group decided to write off the fair value of its stake due to a "significant decrease in value for equity investors."

"A fair value loss of $493 million was recognised in other comprehensive income in the current year," the report disclosed.

This decision aligns with a note from HSBC, which had previously stated that Prosus' nearly 10% stake in Byju's has no value. HSBC's assessment, released on May 21, underscored multiple legal cases and a severe funding crunch facing Byju's. "We assign zero value to Byju’s stake amid multiple legal cases and funding crunch," HSBC noted, adding that they had previously applied an 80% discount to the latest publicly disclosed valuation.

Legal Challenges and Financial Struggles

The write-off occurs at a critical juncture for Byju's, as the National Company Law Tribunal (NCLT) has prohibited the company from proceeding with its second rights issue. An NCLT order dated June 12 directed Byju's to maintain the status quo in its shareholding, effectively halting its contentious rights issue.

In response, the cash-strapped edtech firm has filed a petition with the Karnataka High Court challenging the NCLT order. The matter is listed for hearing on Monday.

Ongoing Legal Battles

Prosus is also embroiled in a legal battle with Byju's in the Karnataka High Court. The edtech firm has filed a petition against a group of investors, including Prosus, concerning an extraordinary general meeting that sought to remove CEO Raveendran from the company.

Both the NCLT and Karnataka High Court proceedings continue to exacerbate the legal troubles for the Peak XV Partners-backed company.

A Sour Investment

Over the years, Prosus has invested $500 million in Byju's, making it one of its largest edtech bets in India. However, this investment has turned sour amidst the financial and legal chaos surrounding the firm.

Prosus has also marked its investment in Primrose Hill (ZestMoney) to zero, down from $38 million in FY22, highlighting the challenges the investment firm faces in its edtech portfolio.

The decision by Prosus to write off its stake in Byju's underscores the severe financial and legal issues plaguing the edtech giant. As Byju's battles multiple legal challenges and strives to stabilize its financial footing, the road ahead remains fraught with uncertainty.