Prosus writes off $22 billion Indian edtech giant Byju’s to zero

Prosus, one of Byju’s largest investors, on Monday said its once-$2.1 billion worth stake in the Indian edtech startup is now worth nothing, but it is still hopeful that the formerly most-valuable Indian startup can be salvaged.

The largest external investor in Byju’s with a 9.6% stake, Prosus said in its quarterly report that its stake in the startup is now worth zero “due to the significant decrease in value for equity investors.” Prosus Group CIO, Ervin Tu, said on an earnings call that the firm is still hopeful about Byju’s outlook, but improving governance at the Indian firm will be key.

The Indian edtech giant has had a difficult couple of years as it grappled with a series of financial and governance setbacks that have tarnished its reputation and imperiled its future. The startup’s woes were amplified last year when it failed to meet financial reporting deadlines and ultimately reported revenues well below its own projections.

The financial stumbles were compounded by the sudden departures of its auditor and board members, including a Prosus executive, and scuttled a potential $1 billion fundraising effort. In a desperate bid for capital, the startup raised $200 million this year, but at a drastically reduced valuation of about $225 million to $250 million. This lifeline has also been entangled in legal disputes with some of Byju’s largest backers, including Prosus.

The South African-Dutch investor, whose portfolio includes high-profile companies like Tencent, Delivery Hero, Swiggy and Stack Overflow, has invested more than $570 million in Byju’s over the years. It has never sold any shares in the Indian edtech startup, whose valuation climbed to a peak of $22 billion in early 2022. Prosus on Monday said its stake in Byju’s now represented a fair value loss of $493 million, after the adjustment, in its current financial year.

Prosus has also cut down the value of its other investments: It reduced the value of its stake in Stack Overflow, which it bought for $1.8 billion in 2021, by 39%, and has lowered the worth of its stake in Indian online pharmacy, PharmEasy, by 35%.

The firm’s readjustment of Byju’s stake comes after BlackRock, the world’s largest asset manager, also wrote off its stake in the Indian edtech startup. Prosus last year complained that Byju’s had “regularly disregarded advice” from it.