Byju’s Founder Proposes Share Offer to Mend Relations with Estranged Investors

Byju Raveendran, the founder of Byju’s, is making efforts to address the concerns of the company’s disgruntled investors, including Prosus Ventures, through a proposed offer of renounced shares. These renounced shares are the shares that a group of investors opted not to purchase recently as a form of protest. The aim of this offer is to prevent the dilution of the investors’ holdings amid the validation process of a recent rights issue that significantly reduces Byju’s valuation by 99%.

The conflict between Byju’s and its investors arose from a rights issue initiated by the startup in late January. This move followed a year-long struggle for the company to raise funds. Rights issues enable companies to raise capital by offering existing shareholders the opportunity to purchase additional shares at a discounted price in proportion to their current holdings. Investors such as Prosus, Peak XV, and the Chan Zuckerberg Initiative chose not to participate in the rights issue, risking substantial dilution of their holdings in Byju’s.

These investors are currently engaged in a legal battle to remove Raveendran from the company and invalidate the $200 million raised through the rights issue. Earlier this year, they secured a court order requiring Byju’s to transfer the $200 million to an escrow account until the legal matters are resolved.

In an email sent to shareholders, Raveendran expressed the board’s consideration of offering renounced shares to the disgruntled investors, despite their animosity and legal actions. This move underscores Byju’s efforts to address investor concerns and navigate the challenges surrounding its recent fundraising efforts.