HSBC Values Prosus Stake in BYJU's at Zero: Report

Amidst the ongoing crisis at Byju’s, in November last year, Prosus decreased the valuation of the edtech firm to below $3 billion.

Outlook Start-Up Desk

Updated on: 7 June 2024 12:41 pm

Financial firm HSBS, in a research note, mentioned that the 10 per cent stake that Dutch tech investment firm Prosus has on edtech platform Byju’s has no value. This was first reported by the Economic Times.

In a note, HSBC reportedly said on May 21, “We assign zero value to Byju’s stake amid multiple legal cases and a funding crunch.” The note added, “Previously, we valued around a 10% stake in BYJU's by applying an 80% discount to the latest publicly disclosed valuation.”

The Dutch firm first invested in the embattled edtech platform in 2018. Over the years, the company has invested $500 million in the edtech firm. Amidst the ongoing crisis at Byju’s, in November last year, Prosus decreased the valuation of the edtech firm to below $3 billion. In July 2022, when the edtech firm was at its peak, it was valued at $22.5 billion.

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Previously, Prosus cut the valuation of the edtech firm two times: it was cut to $5.9 billion in November 2022, and in June 2023, it was cut to $5 billion. Additionally, in June 2023, Prosus stepped down from the board of Byju’s.

Highlighting the decision to step down, the company said, “Despite repeated efforts from our director, executive leadership at BYJU's regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters.”

The company added that while Byju’s grew considerably since Prosus’s first investment in 2018, “over time, its reporting and governance structures did not evolve sufficiently for a company of that scale.”

Meanwhile, four investors—Prosus, GA, Sofina, and Peak XV—have filed an 'oppression and mismanagement' suit against the edtech company in the National Company Law Tribunal. In the plea, the investors highlighted that the current management of the company, including Byju’s founder, Byju Raveendran, is unfit to run it. Byju’s has been grappling with several legal cases and top-level exits. Amid a huge financial crunch, the company has also laid off several employees and is finding it hard to pay their salaries.