Byju's Valuation Takes a Hit as BlackRock Slashes it by Two-Thirds to $8.4 Billion
BlackRock Slashes BYJU'S Valuation by 62%
31 May 2023
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Kunal Tyagi
BlackRock, the world's largest asset manager, has slashed the valuation of BYJU's, the most valued edtech startup, by 62.7% to $8.2 billion.
BlackRock's valuation adjustment is based on the macro and microenvironment assessment and does not necessarily indicate a permanent markdown.
Other investors, including Prosus, still value BYJU's higher, as evidenced by the recent $250 million fundraising round at a valuation cap of $22 billion.
BYJU's, the world's most valued edtech startup, is facing another blow as BlackRock, the largest asset manager globally, has significantly marked down its valuation. The latest regulatory filing by BlackRock reveals that the company has valued BYJU's at $8.2 billion, representing a 62.7% decrease from its previous valuation of $22 billion during its last fundraising round in October 2022. While BlackRock owns less than 1% of BYJU's parent company, Think and Learn Pvt Ltd, this markdown raises concerns about the company's financial performance and business practices. Let's delve into the details surrounding this valuation adjustment and its implications.
BlackRock's recent regulatory filing with the US Securities and Exchange Commission shows a substantial reduction in the valuation of BYJU's. The asset management firm has valued BYJU's at $8.2 billion as of March 31, 2023, marking a 62.7% decrease compared to the previous valuation. These adjustments are based on the macro and microenvironment assessment conducted by BlackRock and do not necessarily indicate a permanent markdown of BYJU's overall valuation. Notably, BlackRock also sold its shares in BYJU's during this period.
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While BlackRock's markdown raises concerns about BYJU's financial performance and business practices, it's important to note that BlackRock is not a significant stakeholder in the company. With less than 1% equity ownership, their valuation adjustment does not carry as much weight as that of other prominent investors like Prosus. Furthermore, different investors may have varying valuation methodologies, leading to contrasting views on the company's worth. This is evident from BYJU's recent fundraising round, where the company raised $250 million at a valuation cap of $22 billion, signaling that other investors still have confidence in the startup.
BYJU's is not the only startup facing a valuation markdown in recent months. Institutional investors have also revised valuations for companies such as Meesho, Pine Labs, PharmEasy, Ola, and Swiggy. These markdowns shed light on the impact of global market conditions on the Indian startup ecosystem. While funding activity declined last year, larger startups managed to maintain their valuations through convertible notes or by abstaining from raising funds altogether. However, the current scenario reflects a different reality, as investors reassess their investments amidst market fluctuations.
Aside from valuation concerns, BYJU's has faced financial challenges and enforcement scrutiny. The company has been under scrutiny for delays in reporting financial results and allegations of mis-spelling courses. Lenders have sought amendments to loan terms, further adding to the company's financial woes. Additionally, the Directorate of Enforcement conducted searches on BYJU's premises in April, investigating potential violations of foreign exchange rules related to investments received and the transfer of funds abroad.
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