BYJU'S Promoters Sell $408.53 Million Worth of Shares in Secondary Transactions: Analysis

Introduction: 

BYJU'S, a leading edtech firm, has recently seen a series of secondary transactions involving the sale of shares by its promoters, which amounted to a total of $408.53 million. PrivateCircle Research conducted a comprehensive analysis of these transactions, shedding light on the evolving ownership structure of the company. Let's delve into the details of these secondary deals and their implications for BYJU'S.

BYJU'S Promoters' Share Sales: A Closer Look at the Evolving Ownership Structure

Promoters' Share Sales: 

According to the analysis by PrivateCircle Research, the founder and CEO of BYJU'S, Byju Raveendran, individually sold 29,306 shares since 2015, resulting in proceeds of $3.28 million. Divya Gokulnath, co-founder and wife of Raveendran, sold 64,565 shares, generating $29.40 million. Riju Ravindran, Raveendran's brother and a director at BYJU'S, sold 337,911 shares, amounting to $375.83 million. It's important to note that these secondary sales often occurred at discounted valuations compared to the primary valuation of the company at that time.

Discounted Valuations: 

During BYJU'S Series F round, the secondary sales witnessed an average discount of 53% compared to the primary share price. The promoters sold their shares at prices ranging from Rs 1,12,126 to Rs 1,64,000 per share, while the Series F primary share price ranged from Rs 2,13,042 to Rs 2,37,336. The analysis conducted by PrivateCircle Research utilized public data sources, and in cases where the secondary share price was unavailable, the closest primary share price was used as a reference point.

Investors in Secondary Transactions: 

Several investors participated in BYJU'S secondary transactions, including Silver Lake Partners, Blackrock, T Rowe Price, Chan Zuckerberg, Owl Ventures, Naspers, Times Internet, Lightspeed Ventures, Proxima Beta, Naspers Ventures, General Atlantic, and Alkeon. These investors contributed to the changing ownership structure of the company through their participation in various funding rounds.

Promoters' Purchases and Shareholding: 

Byju Raveendran has also made purchases of shares, totaling 31,960, from various sellers since 2012. Divya Gokulnath acquired 4,666 shares from the founders of Vidyartha after BYJU's acquisition of the company in 2017. Riju Ravindran purchased 100 shares from BYJU'S COO. However, the value of these secondary purchases could not be determined.

Promoters' Personal Investments and Shareholding: 

During a recent shareholders call, Byju Raveendran disclosed significant personal investments in BYJU'S. These include $400 million in the parent company, $250 million for the Aakash acquisition, and an additional $250 million through pledged secondary shares in the latest funding round. Raveendran also revealed that all the proceeds from the secondary share sales have been reinvested in BYJU'S at a valuation of $22 billion. Currently, the promoters collectively hold a 21% stake in the company, with Raveendran owning 15.90%, Gokulnath holding 3.32%, and Ravindran possessing 1.99%.

Implications and Challenges: 

The analysis of the evolving ownership structure comes at a critical time when BYJU'S is facing multiple challenges. These challenges include the departure of Deloitte as its auditor, the resignation of three prominent board members, conflicts with creditors over a $1.2-billion term loan B, and delays in filing financial statements. These challenges add to the complexities that BYJU'S is currently navigating.

Conclusion: 

PrivateCircle Research's analysis highlights the significant secondary transactions in which the promoters of BYJU'S have sold shares amounting to $408.53 million. These transactions have resulted in changes in the ownership structure of the company, with the promoters' stake gradually decreasing over time. The proceeds from the share sales have been reinvested in BYJU'S, indicating the promoters' continued commitment to the company's growth. However, BYJU'S also faces various challenges, including auditor changes, board member resignations, creditor conflicts, and reporting delays. The evolving ownership structure and ongoing challenges depict a dynamic phase for BYJU'S as it strives to overcome obstacles and maintain its growth trajectory in the competitive edtech industry.