BYJU'S plans to raise funds at a lower valuation of USD 7-8 billion as the embattled edtech major looks to shore up its financials with adequate liquidity, a senior company executive said on Tuesday.
Banking on overall "improved performance", Think and Learn, the parent of BYJU's, is hopeful of a higher valuation ahead of its rights issue being planned in February to raise funds.
BYJU's India Chief Financial Officer Nitin Golani said the company is in need of funds and plans to raise it at a lower valuation to make the offer lucrative for investors as well as ensure adequate liquidity support for the edtech firm.
He said Aakash was acquired when revenue was around Rs 1,000 crore and now it is a Rs 2,700 crore company, which at bare minimum gained valuation of USD 2 billion from one billion.
Golani said that BYJU'S acquired Great Learning for USD 600 million when the company's revenue was only Rs 400 crore and now the same company has revenue in the range of Rs 900-Rs 1,000 crore, which led to a significant rise in its valuation.
"Our core business revenue has also increased significantly. There are several brands within the company that have seen an increase in valuation. If you combine the valuation of all the businesses, it will be worth a bare minimum of around USD 7-8 billion," Golani said.
The company has now institutionalised to organise weekly meetings with investors, take their feedback and execute it, he noted.
"The company's shareholders are watching the business closely and they understand the company's worth. If they are offered an attractive valuation in the range of USD 3-4 billion then a lot of investors, who are financial investors, will take up this lucrative offer, invest in the company and provide liquidity support to the company," Golani said.
Recently, an early investor in BYJU'S Blackrock lowered the valuation of BYJU's to less than USD 1 billion compared to the peak valuation of USD 22 billion at which the company had raised funds in March 2022.
Dutch venture capital Prosus has lowered the valuation of BYJU's to less than USD 3 billion.
Golani said the company has no control over the way shareholders mark the valuation of the company.
"Valuation of the company by shareholders is not in my control. We have not put any number on the table for rights issues. We are negotiating with investors. The rights issue is a market discovery process. It will be discovered in a month or so. We are planning it in February," Golani said.
BYJU's on Tuesday filed results after a delay of about 22 months in which it reported a widening of operational loss to Rs 6,679 crore in FY22, mainly due to losses incurred by subsidiaries White Hat Jr and Osmo.
The company posted an operational loss (EBITDA) of Rs 4,143 crore in FY 2021, the company said in a regulatory filing.
Its revenue more than doubled to Rs 5,298.43 crore in FY22 from Rs 2,428.39 crore in FY21.
"Underperforming assets were primarily White Hat Jr (WHJ) and OSMO (Tangible Play), which amounted to 45 per cent of the losses at around Rs 3,800 crore," BYJU'S said.
Excluding WHJ and Palo Alto-based edtech startup OSMO, BYJU'S recorded three-fold growth year-on-year in its total income in FY22.
BYJU'S subsidiaries Aakash and Great Learning grew 40 per cent and 77 per cent, respectively, immediately after the acquisition.
Aakash revenue increased by 40 per cent to Rs 1,491 crore in FY22 from Rs 1,065 crore in FY21.
Great Learning posted an 80 per cent rise in revenue to Rs 628 crore in FY22 against Rs 354 crore in the preceding fiscal.
Golani said BYJU's has done 13 acquisitions in the last two years out of which two have not given returns as per expectation, which is WHJ and OSMO.
He said that the performance of the company in terms of revenue and EBITDA has consistently improved in FY23 and FY24 without mentioning any specific financial details.
The company, however, has missed its target timeline to achieve profitability.
BYJU’s auditor observed that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern due to continuing net losses from operations and accumulated losses, in addition to the uncertainty related to the outcome of the litigation and its financial impact thereon in respect of the USD 1.2 billion Term Loan B facility (TLB Loan) availed by BYJU'S Alpha Inc.
However, based on a legal opinion, the management has shared its view that it is unlikely that the TLB loan will be required to be paid in the foreseeable future.
Golani said that BYJU’S has significantly curtailed spending made in WHJ and OSMO.
"Our marketing spend in these businesses is zero. Everything that is coming into the company is through organic routes. I do not want to continue running that business which is not economically viable at the scale where it is operating. I want to bring it down to a scale, where it is economically viable to have a sort of self-sustainable business," Golani said.
He said that the employee cost has been significantly optimised and most of the restructuring exercise within BYJU’S group was at these two entities.
"My immediate mandate is to prepare results for FY23 and then complete financial result of FY24 after the fiscal year ends in March 2024," Golani said.
The effort is on to file results for FY23 before the proposed rights issue, he added.