Prosus writes off its massive investment in Bengaluru-based Byju's, records a $493 million loss

Prosus, an investment firm owned by Naspers, said it has written off the value of its 9.6% stake in Bengaluru-based troubled edtech startup Byju’s. 

The primary reason cited for this decision is a significant decrease in the value for equity investors in Byju’s. “A fair value loss of $493 million was recognized in other comprehensive income in the current year,” Prosus said in a stock exchange filing in the Netherlands.

Over the years, Prosus has invested around $500 million in Byju’s, making it a substantial investment in the growing Indian startup ecosystem.

HSBC's view on Prosus' stake value in Byju's

The development comes a month after HSBC valued Prosus' stake in Byju's at zero due to the multiple legal cases and funding challenges the Bengaluru-based startup has been facing.

"We assign zero value to Byju’s stake amid multiple legal cases and funding crunch," HSBC said in a note on May 21.

How has Byju’s valuation changed over time?

Byju’s, once valued at $22 billion, has seen a dramatic decline in its valuation. In January this year, the company raised $200 million through a rights issue, valuing it at just $225 million, a 99% discount from its peak valuation. 

The severe drop in valuation has also impacted Byju’s founder, Byju Raveendran, whose net worth has fallen to zero from approximately $2.1 billion, according to the Forbes Billionaire Index 2024.

Departure of executives, advisors 

Byju’s financial troubles are compounded by significant leadership departures and ongoing legal issues. In the past year, the company has seen the exit of its Chief Financial Officer, Ajay Goel, in October 2023 and India CEO, Arjun Mohoan, in April 2024.

Additionally, Rajnish Kumar and T V Mohandas Pai, members of Byju’s advisory council, announced their departure last month. The National Company Law Tribunal (NCLT) has also prohibited Byju’s from proceeding with its second rights issue, directing the company to maintain the status quo in its shareholding.

Byju's has reportedly approached the Karnataka High Court to challenge an order from the National Company Law Tribunal (NCLT) that prevents it from proceeding with its second rights issue.

According to the High Court's website, the plea was briefly heard on June 18 and 21, but no substantial order was issued on these dates. This came after NCLT, on June 12, directed Byju's to maintain status quo with regard to existing shareholders and their shareholding.

This is not the first time Prosus has written off an investment in a struggling company. Last year, the Dutch investment firm marked down its $38 million investment in the buy now, pay later startup ZestMoney, which was later acquired by DMI Group in a fire sale.