Hostile investors likely to skip Byju’s $200-mn rights issue

livemint.com:

MUMBAI : Hostile investors in Think and Learn Pvt. Ltd, the parent company of Byju’s, are likely to skip participating in the edtech firm’s $200-million rights issue that will conclude on Wednesday at midnight, people familiar with the developments said. Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA had collectively filed a petition with the National Company Law Tribunal last week against the rights issue, seeking reprieve citing oppression and mismanagement of the company.

These four investors collectively hold around 25% stake in the company. The tribunal on Tuesday deferred its verdict on the case to next week, which, in effect, means Byju’s can go ahead with its rights issue. Byju’s is likely to go ahead with the rights issue on Wednesday, said a person with knowledge of the company’s plans.

Spokespersons for the investors as well as the company did not immediately respond to queries seeking comment. “Most serious investors of the company are unlikely to participate in the rights issue," one person with knowledge of the developments said. Byju’s has said that it already has secured commitments for the rights issue.

The investors are now betting on a court instruction that Byju’s founders will have to seek approval from the existing investor base to expand the share capital of the company. “NCLT observed that Byju’s board cannot increase authorised share capital on its own (for the rights issue). The court directed that they cannot complete the rights issue until they call for an (extraordinary general meeting) to increase authorised capital and take shareholder approval before proceeding for rights issue," a third person said.