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Baron Capital Slashes BYJU’S Valuation by 99.85%

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In a significant blow to Indian edtech giant BYJU’S, US-based asset management company Baron Capital Group has reduced the valuation of its stake in the firm by a staggering 99.85% as of March 31, 2024. According to filings with the US Securities Exchange Commission, Baron Capital’s investment value in BYJU’S has plummeted, sharply cutting the company’s valuation to approximately $24 million. This marks a dramatic decrease from its peak valuation of $22 billion in October 2022, reflecting the growing valuation concerns surrounding BYJU’S recent $200 million rights issue.

Baron Capital, which holds 15,334 shares through the Baron Emerging Markets Fund and 9,201 shares via the Baron Global Advantage Fund, has appraised its investment in BYJU’S at $75,485 and $45,294, respectively. Given the current share price of around $4.92 and a total outstanding share count of 4,808,266 (as per Tracxn), BYJU’S is now estimated to be valued at approximately $23.7 million.

Earlier this year, BYJU’S initiated a rights issue to secure $200 million via equity, pegging its pre-money valuation at about $20 million. Consequently, the enterprise valuation was expected to be approximately $220 million following the round’s conclusion.

The asset management company’s quarterly report highlighted that both Snowflake and “a final write-down of Think & Learn” impacted it by over 50 basis points each. Regarding the fair value measurement of BYJU’S, the AMC specified “Rights Offering Price” as the unobservable input. Unobservable inputs in fair value accounting use the best available information to price assets or liabilities when market data isn’t available.

This development comes as BYJU’S grapples with severe liquidity challenges and increasing legal disputes. The edtech company is currently locked in a tussle with a group of prominent investors, including Prosus, General Atlantic, the Chan Zuckerberg Initiative, and Peak XV, who have sought to void the $200-million rights issue initiated in January by appealing to the National Company Law Tribunal. BYJU’S is also engaged in a legal dispute with some of its investors in the Karnataka High Court.

In a separate development, last month, BYJU’S announced that Mohandas Pai, former CFO and Board Member of Infosys, and Rajnish Kumar, former Chairperson of State Bank of India, will not renew their contracts as advisory board members at BYJU’S.

Amidst the turmoil, Baron Capital marked up the valuation of its stake in Swiggy to $109.16 million from its original investment of $76.77 million, signaling a brighter spot in its investment portfolio.