Prosus writes off $500 Mn investment in Byju’s

Investment firm Prosus said that it has written off the value of its 9.6% stake in edtech company Byju’s. According to the Naspers-owned investment firm, decrease in value for equity investors in Byju’s was the reason behind the write-off. This is a serious understatement, considering most of  Byju’s financial investors now attribute a value close to zero to the edtech firm.

“A fair value loss of $493 million was recognised in other comprehensive income in the current year,” said Prosus in a stock exchange filing in the Netherlands.

For context, Prosus has invested around $500 million in Byju’s over the years. Other notable Indian startups in its portfolio include Swiggy, Meesho and Eruditus.

Byju’s has seen a valuation mark down from its early backers including Prosus for the past couple of years. Recently, financial firm HSBC also said that Prosus' nearly 10% stake in Byju’s has zero value.

The development comes soon after Byju’s raised a $200 million rights issue at a valuation of $225 million. This is a 99% discount to its peak valuation of $22 billion.

The company’s plunging valuation has also seen founder Byju Raveendran’s net worth go to zero, according to the recently released Forbes Billionaire Index 2024. Earlier, his net worth was Rs 17,545 crore (approximately $2.1 billion).

Linked to its financial woes, Byju’s has been facing an exodus at the top as well as board level in the past 12 months. In October 2023, the company’s chief financial officer Ajay Goel left whereas Arjun Mohoan, its chief executive for India, put in his papers in April this year. Last month, Rajnish Kumar and T V Mohandas Pai, who joined edtech firm Byju’s advisory council in July last year, also announced their departure from the company.

Currently, Raveendran is looking after Byju’s day-to-day functioning as the company consolidated its businesses into three key divisions – The Learning App, Online Classes and Tuition Centres, and Test-prep.

Byju’s is not the first company in which Prosus has written off its investment. Last year, the Dutch investment firm marked down its $38 million worth investment in buy now, pay later startup, ZestMoney. The Mumbai-based company later got acquired by DMI Group in a fire sale.

Byju’s mark down is one in a  series of similar announcements, none hopeful, about the once fancied edtech firm. With serious legal and regulatory issues still hanging over the conduct of the firm and its founder, the near future offers no hope at all, barring a miracle. Byju Raveendran would know that, and is probably praying too.