BYJU’S looks to be in further danger as US-based asset management company BlackRock is said to have reduced the company’s valuation by over 50% to $11.5 Billion. This is a significant decrease from the $22 Bn the edtech decacorn was last valued at in 2022.
BlackRock, which owns less than 1% of BYJU’S, is believed to have reduced the value of its shares in BYJU’S from $4,660 per unit in April 2022 to $2,855 per share in its evaluation.
The revelations were initially reported by The Arc and were included in documents that TechCrunch was able to view. It was impossible to contact BYJU’S for comment.
The change occurred shortly after Swiggy’s US-based investor Invesco reduced Swiggy’s valuation by 25%, valuing the large foodtech company at $10.7 Billion in January 2022.
The markdown may make things worse for the Indian startup ecosystem, which has already been under fire from investors for its high valuation and a number of other compliance difficulties in the previous year.
The news adds to a growing number of stories that investors have been slashing the values of the companies in their Indian portfolio due to rising market volatility and compliance problems that are hurting Indian entrepreneurs.
One example is SoftBank, which last year downsized the valuation of the startup company OYO in its portfolio from $10 billion to $2.7 billion. Immediately after, Prosus estimated the value of its 9.76% share in BYJU’S at $578 million, a significant decrease from the $22 billion at which the edtech giant previously raised money.
BYJU’S in trouble
Only months after receiving a massive $250 million investment from current investors in the form of a mix of equity and debt at a valuation of $22 billion, BYJU’S seems to have suffered the worst loss.
The reduction of its valuation might be detrimental to the most valuable companies in the nation given that it was reportedly seeking to raise $500 Mn from many investors, including private equity firm TPG.
The news comes as BYJU’S appears surrounded on multiple fronts. The company has been weighed down by potential debt issues as it has been seeking to renegotiate its $1.2 Bn term loan.
Not just this, the startup also fired 4,000 employees last year while a resurgent competition from peers, especially in the offline space, appears to have brought its break-neck growth of 2021 to a screeching halt.
The biggest issue, however, seems to be its mounting losses which rose nearly 20X year-on-year (YoY) to INR 4,588 Cr in the financial year 2020-21 (FY21), compared to INR 231.69 Cr in FY20.
The startup has also been in the line of fire for delayed financials and lax corporate governance safeguards. Many industry veterans have earlier criticised BYJU’s for questionable accounting practices and no clear path to profitability.
