The founder of India’s most valued edtech firm, BYJU’s, is looking to increase his stake to 40% by buying back up to 15% in the firm, sources familiar with the matter told DealStreetAsia.
BYJU’s Raveendran is looking for funds to finance the buyback, the sources said, adding that the talks with financiers are at an early stage and could even fall apart.
Raveendran’s plan to buy back shares was first reported by Bloomberg. He holds around 25% in the company.
The company declined DealStreetAsia’s request for comment.
The development comes just a couple of days after an email from Raveendran to his employees was doing the rounds on social media. “While we were expecting this third phase to begin in 2024, the macroeconomic changes of 2022 meant that we had to embark on the path to profitability this year itself,” he said.
Despite being backed by marquee investors such as Naspers, the Canada Pension Plan Investment Board (CPPIB), General Atlantic, Tencent, Sequoia Capital, Lightspeed Ventures, Tiger Global, and Owl Ventures, BYJU’S, which was once the poster child of edtech in India, is now seen as an overvalued company caught in the crosshairs of widening losses, flat revenue, rising expenses, and regulatory hurdles, among other challenges.
Under pressure from investors, BYJU’S has been planning to turn profitable by the end of March 2023. The company said it will be “retargeting the marketing budget” towards more efficient growth. In October, it let go of 2,500 of its employees to put a lid on rising costs.
In FY21, BYJU’S expenses surged 2.4 times to Rs 7,027 crore, while its losses ballooned 14.9 times to Rs 4,564 crore.
Netherlands-based technology investor Prosus valued its 9.67% stake in BYJU’S at $578 million at the end of the September quarter, taking a conservative accounting stance for its stake in the edtech firm.
Last month, sources familiar with the matter told DealStreetAsia that BYJU’S was in talks to negotiate the terms for its $1.2-billion loan, as the firm cracks under mounting losses and cost pressures.
A few months ago, Raveendran admitted in a media interviews that the last few months have been difficult for the company and that he has had sleepless nights as a result of all of the critical media reports that have raised many concerns about the company’s operations.