Setback for Byju’s: BlackRock slashes valuation by whopping 95% to just $1 billion

Setback for Byju’s: BlackRock, the world's largest asset manager, has significantly reduced the estimated value of edtech firm Byju's to around $1 billion. This marks a decline of over 95% from its valuation of $22 billion during its last fundraising round in October 2022.
In a regulatory filing with the US Securities and Exchange Commission on January 5, BlackRock disclosed that it has marked down the value of its shares in Byju's for the third time in 2023.The shares were valued at $209.57 each for the quarter ended October, implying a valuation of approximately $1 billion for Byju's. This is a significant decrease from its valuation of $8.2 billion at the end of the March quarter. At its peak in 2022, each share was valued at $4,660, said an ET report.
BlackRock holds less than a 1% stake in Byju's.
Byju's, headquartered in Bengaluru, has experienced a notable decline in its operations and is currently exploring the sale of group assets to address its debt. The company's founder, Byju Raveendran, has faced challenges in securing new financing, leading to delays in salary payments for employees in November and other operational difficulties. Raveendran recently assured a group of senior employees that the cash shortage should be resolved within the next 45-60 days.
In November, Prosus, a Dutch investor, also marked down its valuation of Byju's to under $3 billion, compared to the $5.1 billion valuation assigned in March of the previous year. Prosus holds slightly less than a 10% stake in the edtech firm.
Crossover investment funds periodically reassess the valuations of their investments, taking into account various factors, including the valuation of comparable companies in the public market.
Byju's has faced scrutiny for delays in reporting its financial results and allegations of questionable business practices, including the alleged mis-selling of courses. Additionally, the company is currently in negotiations with its term loan B lenders. There are also concerns over alleged violations of the Foreign Exchange Management Act, as the Enforcement Directorate has issued notices to Byju's.
According to a report by ET on December 22, Byju's' consolidated loss at its parent company, Think and Learn, is estimated to have exceeded Rs 8,200 crore in the fiscal year 2021-22, with revenue surpassing Rs 5,000 crore. Approximately half of the loss is attributed to the write-off of its subsidiary, Whitehat Jr, which was acquired for $300 million in 2020.
TechCrunch, a US news publication, was the first to report on BlackRock's markdown of Byju's valuation.
Investors have demanded that Byju's promptly release its audited financial results for 2022-23 before considering any further investments in the company.
Once regarded as India's most valued startup, Byju's has faced challenges in meeting staff salary obligations while actively seeking buyers for its group assets, such as Epic and Great Learning.