HSBC values Prosus’ stake in BYJU’S at zero

HSBC, a prominent global banking and financial services institution, has assessed the value of Netherlands-based investment company Prosus' stake in BYJU’S is zero.

The London-headquartered financial services group, in a research note, mentioned that it assigned “zero value” to BYJU’S stake “amid multiple legal cases and funding crunch”.

Earlier, HSBC valued Prosus' stake in BYJU’S by applying an 80% discount to the most recent publicly disclosed valuation, it added.

Prosus, the largest institutional shareholder of BYJU’S, has injected about $536 million into the company to date, with a stake of around 10% in the edtech firm.

Prosus had issued a statement expressing apprehensions regarding BYJU’S reporting and governance frameworks a month after its representative, Russell Dreisenstock, formally stepped down from the Board of the edtech firm last year.

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BYJU’S rights issue: a much-needed lifeline or an overplayed hand?

The edtech company, once riding high with a peak valuation of $22 billion in 2022, has seen a sharp decline in its valuation in recent times. Most recently, US-based asset management company Baron Capital reduced the valuation of its stake in BYJU’S by 99.85% as of March 31, 2024.

These developments come as the edtech company hopes for a revival amid increasing challenges.

Besides a severe liquidity crunch, BYJU’S is locked in a tussle with a clutch of prominent investors, including Prosus, General Atlantic, Chan Zuckerberg Initiative, and Peak XV, which have sought to void the $200-million rights issue initiated in January by appealing to the National Company Law Tribunal. 

The Bengaluru-based edtech firm is also engaged in a legal dispute with some of its investors, including Prosus, in the Karnataka High Court.

Meanwhile, BYJU’S is also involved in a dispute with a group of US-based lenders over a $1.2-billion term loan B (TLB). Recently, some term holders and an agent of the term loan filed petitions in Delaware Bankruptcy Court to initiate involuntary Chapter 11 bankruptcy proceedings against the edtech startup's subsidiaries—Epic, Tynker, and Osmo.