Prosus slashed the value of its stake in the Indian edtech start-up Byju’s to zero and logged a fair value loss of $493 million based on its investment in the crisis-hit firm. The company released its annual report for the 2023-24 fiscal year (FY24) on Monday and said that it registered a fair value loss of $493 million due to its investment in the start-up.


Prior to Byju’s rights issue, the tech investor said that it controlled a 9.6 per cent effective stake in the firm, reported Moneycontrol. A spokesperson for the investor informed, “We have impaired Byju's down to zero at the end of FY24. We have written down Byju's primarily because we have inadequate information on company’s financial health, liabilities, and future outlook.”


Sharing information with the investors, the company said that the internal rate of return (IRR) from its investment in the start-up stood at minus (-) 100 per cent. IRR typically represents the profitability of an investment. A negative IRR means that the projected outgoing cash flow is less than the estimated incoming cash flow during the investment’s lifetime. 


Notably, the edtech firm, founded by Byju Raveendran, has been in a battle with its investors such as Prosus, Peak XV Partners, who have issued multiple legal challenges against the edtech firm’s management and their decisions. A challenge has also been issued against a bid by the promoter family to conduct a rights issue that could end up completely erasing the investors’ shareholdings.


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Earlier in the first half of the fiscal, Prosus marked down the valuation of the edtech to less than $3 billion, clocking a drop of 86 per cent from the earlier funding round valuation of $22 billion. 


The investor noted, “Edtech continues to be a very interesting area for us. At the same time, our busineses have not performed. We spent a lot of time to improve their performamce. We have three large positions in edtech- stack overflow, Skillsoft and Byjus . All three of them have not performed. Byjus we have written down to zero. Byju's has been an important contributor to challenged performance in the last year.”