Mint Explainer: The mountain of legal cases that could bury Byju’s
₹9,362.35 crore. Mint explains the circumstances behind the various legal cases Byju’s is battling. On 22 February, a consortium of four Byju’s investors—Prosus NV, General Atlantic, Sofina, and Peak XV Partners, with support from Tiger Global and Owl Ventures—moved the Bengaluru bench of the NCLT against the edtech firm’s rights issue.
This is currently the most important legal case for Byju’s and its investors, as it will determine if the company can use the money raised from the rights issue, which it desperately needs. Investors are challenging the $200-million rights issue, launched earlier this month, because it is taking place at a pre-money valuation of just $20 million, meaning it could dilute the shareholding of non-participating investors by 99%. At its peak, Byju’s commanded a valuation of $22 billion.
Byju’s has said the rights issue has been ‘fully subscribed’. As a sweetener to hostile investors, the company has said it would appoint a third-party agency to monitor the use of funds raised through the issue. The investor consortium has claimed before the NCLT that Byju’s management had not shared relevant financial information on the rights issue with them, and pointed to what they termed the “oppressive nature of the rights offer" and the “oppressive opacity and wilful default in sharing information with stakeholders".
Before moving the NCLT, the investors had sought to oust Raveendran from the company’s board and take control through an extraordinary general meeting last Friday. The meeting was attended by at least two dozen investors including Prosus, General Atlantic, Sofina, and Peak XV Partners, who ‘unanimously’ passed all the seven resolutions put to vote. Byju’s, however, had moved the Karnataka
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