:Indian edtech startup Byju’s is in advanced talks with potential new shareholders to raise $1 billion in funding as it attempts to sidestep a revolt by some investors, Bloomberg News reported on Tuesday, citing sources familiar with the matter.
Once counted among India’s most successful startups, Byju’s is caught in what many see as a governance crisis after it lost board members representing three global investors – Peak XV, Prosus NV, and the Chan-Zuckerberg Initiative – and auditor Deloitte last week.
While the board members did not give a reason for stepping down, Deloitte said it was severing ties with Byju’s over delays in disclosing some financial statements. The company was also raided over suspected violations of foreign exchange laws.
Bloomberg News said on Tuesday Byju’s is offering benefits like preferential treatment in the case of liquidation to the potential investors, adding that none of its existing shareholders have that option.
Reuters could not immediately verify if existing shareholders in Byju’s have that option.
It was not clear if founder Byju Raveendran will ultimately secure a capital influx, the sources, who asked not to be named as the information isn’t public, told Bloomberg News.
Byju’s did not immediately respond to a Reuters’ request for a comment.
A part of the fund to be raised will likely be used by the company to pay down a disputed $1.2 billion term loan, the report added. Byju’s and its lenders are involved in legal cases in the United States over the restructuring of the loan.
The startup, valued at $22 billion last year, has asked investors to reconsider quitting its board, three sources with direct knowledge of the situation told Reuters last Friday.
Byju’s Founder and chief executive Byju Raveendran plans to reconstitute the company’s board only after completion of the fundraise as new investors may possibly occupy some of the vacancies, Bloomberg said in its report.
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