Shareholders ask Byju Raveendran to step down

Mumbai: Several large shareholders of Think and Learn Pvt. Ltd., the parent entity of edtech startup Byju’s, have called for a change in the company’s management, including the removal of co-founder and chief executive Byju Raveendran, people aware of the development told Mint.

General Atlantic, Prosus Ventures, Peak XV and Chan Zuckerberg Initiative, among others, signed a notice on Thursday calling for an extraordinary general meeting to also propose a reconstitution of the beleaguered company’s board.

"The notice was sent after the company failed to act on an EGM requisition notice sent first in July and then in December," a person with knowledge of the development said.

In a media statement, a consortium of investors in Byju's who did not identify themselves, said that they were issuing the EGM notice in the interest of the company and its shareholders.

"The resolutions being put forward for the EGM to consider include a request for the resolution of the outstanding governance, financial mismanagement and compliance issues; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the company," the investors said in the statement.

Byju's spokesperson did not immediately respond to a request for comment.

The investor statement was not signed by Chan Zuckerberg, a person with knowledge of the developments said.

"The firm signed the EGM notice and looks forward to the concerns raised by the shareholders addressed at this meeting," the person cited above said. 

Chan Zuckberg Mauritius, an affiliate of Chan Zuckerberg Initiative (a firm founded by Facebook founder Mark Zuckerberg) is a shareholder in Byju's.

Byju’s, which reached its peak valuation of about $22 billion in late 2021 amid a surge in remote learning during the pandemic, making it India's most valuable startup, has since experienced a downturn. 

The company is grappling with increased liabilities owed to vendors and employees as students returned to in-person learning amid the reopening of the economy.

Investors said that the EGM notice followed several months of attempts to engage with the company’s management to resolve ongoing issues related to corporate governance, mismanagement, and compliance. 

The notice for the EGM follows a rights issue that the company launched last week to raise $200 million from its existing shareholders, valuing the firm at a post money valuation of $225-250 million. 

The funds will be used to pay off mounting liabilities. From employee provident fund to unpaid vendors, the company’s liabilities are pegged at $125-$150 million.

Investors not participating in the rights issue will face massive erosion of their shareholding, given that shares are being offered at 0.1% of its peak valuation in its last funding round.

The company has been battling multiple issues for over a year, and is at loggerheads with its $1.2 billion Term Loan B bondholders, who have sued the company citing technical default. 

This default pertains to the company’s inability to file financial results for the period ended 31 March 2022, in time as well as its inability to put up its subsidiary Whitehat Jr as guarantor. A hearing is scheduled to come up at the Bengaluru bench of the National Company Law Tribunal on 7 February.

Byju's has been trying to negotiate with its bondholders and at the same time also raise money by selling some key assets such as US-based Epic and Singapore-headquartered Great Learning.

After a delay of more than 22 months, the company filed its consolidated financials for the period between April 2021 and March 2022 last month. Its losses ballooned to ₹ ₹8,245 crore from ₹4,564 crore in the year prior. Consolidated income rose to ₹5,298.43 crore in FY22, up from ₹2,428.39 crore a year ago, the results show.