According to Reuters, Prosus NV announced on Wednesday that it is valuing Byju's at less than $3 billion, 86% less than its peak valuation of $22 billion last year, as the company has suffered with governance and cash flow issues.
The announcement, delivered by interim CEO Ervin Tu during the Prosus earnings call, is Byju's latest and most substantial valuation drop. This is the second time Prosus has reduced Byju's worth. Prosus first reduced Byju's fair value to $5.97 billion in November of last year.
In July, a director of the firm resigned from Byju's board of directors. Prosus claimed that Byju's directors "regularly disregarded advice" despite repeated efforts by the former director of the Dutch-listed technology startup. It stated that its director's decision to resign from Byju's board was mostly due to him being "unable to fulfil his fiduciary duty to serve the long-term interests of the Company and its stakeholders."
Byju's, previously India's most valuable startup, counts General Atlantic and BlackRock among its investors, but its auditor, Deloitte, and other investor board members have resigned in recent months. The Enforcement Directorate (ED) announced earlier this month that it had issued a foreign exchange violation show cause notice of more than Rs 9,300 crore against Byju's and its CEO and co-founder, Byju Raveendran.
The federal investigation agency cited several grounds for charging the company and its chief promoter, including charges of "failing" to submit documents of imports against advance remittances made outside India, "failing" to realise proceeds of exports made outside India by the delayed filing of documents against the Foreign Direct Investment (FDI) received into the company, and "failing" to realise proceeds of exports made outside India by the delayed filing of documents against the Foreign Direct Investment (FDI) received into the company.
It added in a statement that a show cause notice had been given to BYJU's registered firm, Think & Learn Private Limited, and Raveendran for violations of the Foreign Exchange Management Act (FEMA) to the tune of Rs 9,362.35 crore. Following final adjudication, the ED has the authority to fine FEMA violators up to three times the amount specified in the show cause notice.
