Ahead of a significant extraordinary general meeting (EGM), the rights issue of ed-tech giant Byju's, aiming to raise $200 million with a substantial valuation cut of 99%, has garnered complete subscription. Byju Raveendran, the founder, is expected to inject $45-$46 million into the rights issue to uphold his ownership stake. Additionally, there is anticipation of late-stage investors participating in this funding round.
The impetus for the EGM stems from Byju's major investors who are seeking leadership changes and a board overhaul. Allegations of financial mismanagement, value erosion due to failure to enforce legal rights, and withholding of crucial information have been leveled against the current leadership.
A consortium of Think & Learn (T&L) shareholders initiated the call for the EGM, following prior disregarded notices sent to the T&L board of directors. Resolutions proposed for the EGM encompass governance reforms, addressing financial mismanagement and compliance issues, restructuring the board to diminish founder influence, and altering the company's leadership.
However, there's a looming risk for shareholders who fail to participate in the rights issue by February 29, potentially facing substantial dilution of their stakes.
Byju Raveendran conveyed his gratitude to shareholders for the complete subscription of the rights issue. He emphasized the importance of collective participation in preserving and augmenting shareholder value. Raveendran acknowledged the difficult decision shareholders face but underscored the necessity of unified action to avert permanent value erosion. Quoting Abraham Lincoln, he stressed the imperative of unity for the company's sustainability and urged shareholders to act in its best interests.
The successful subscription of the rights issue underscores investor confidence in Byju's, despite the internal upheaval precipitated by calls for leadership changes. As the company braces for the pivotal EGM, the outcome of these deliberations will significantly shape its future trajectory.
