Troubled edtech major Byju’s has kicked off a $200 million rights issue to raise funds from its existing investors, starting from January 29. The issue will be valid for for the next 30 days, according to sources.

Troubled edtech major Byju’s has kicked off a $200 million fundraise via rights issue starting on January 29 at valuation between $230-$250million, which is significantly lower than the company’s last funding round which happened at a valuation of $22 billion, according to sources.

The issue will be valid for next 30 days, sources added.

The edtech major — which is facing multiple crises and is in urgent need of capital — will see a post-money valuation of $230-$250 million, which is significantly lower than the company’s last funding round which happened at a valuation of $22 billion, the sources said.

The fair market valuation will be arrived at separately, in case the issue is not fully subscribed. Byju’s valuation has seen significant downgrades from several investors including BlackRock to just about $1 billion.

In the note to investors, CEO Byju Raveendran said the company has not ‘shied away from taking several tough decisions’ amid its current challenges. “It has been 21 months since our last external capital raise, during which we have cut our burn and worked to become a lean organisation, razor-focused on execution. The Board believes it is imperative that the company raises capital in order to create a glidepath to deliver strong shareholder value. This capital raise is essential to prevent any further value impairment and to equip the company with necessary resources to deliver on its mission,” said Raveendran.

Rights issue

According to the note, the rights issue will offer existing shareholders the opportunity to participate in this proposed capital raise to the extent of their shareholding and beyond.

A rights issue, by design, is a participatory pro-rata means of raising capital, wherein existing shareholders have the right and the privilege of contributing to the needs of the company. It is an equal opportunity to all shareholders to participate and maintain shareholding without the need to ascribe valuations.

In the letter, Raveendran also revealed that the founders have infused over $1.1 billion of their personal funds into the company over the past 18 months. “We believe an expeditious capital raise will provide the company with the resources it needs to rebuild and scale. This shall be used for the continuation of business operations, to manage obligations and to make the company more sustainable,” the note added.

Last week, the company posted its FY22 financials reporting a consolidated revenue jump of 118 per cent from ₹2,428 crore in FY21 to ₹5,298 crore in FY22. Its losses also ballooned from ₹4,564 crore in FY21 to ₹8,245 crore in FY22.

Byju’s filed its FY22 financials with the Ministry of Corporate Affairs (MCA), almost 22 months after the reporting period ended. Meanwhile, the audit of its FY23 financials is yet to be completed even as FY24 is ending.

The company has seen a series of valuation downgrades by its investors over the past year. In November 2023, tech investor Prosus marked down the value of its stake in Byju’s, resulting in a company valuation of less than $3 billion, from the previous valuation of $22 billion.

More recently, global investment management firm BlackRock, which holds less than 1 percent stake in Byju’s, cut down the edtech company’s valuation to $1 billion from the high of $22 billion it fetched in early 2022.