Prosus marks down Byju’s valuation to below $3 bn; says investment in loss

The tech investor also reported a paper loss on its investments in Byju’s as well as Pharmeasy in its earnings presentation on Wednesday. 

Prosus had in November last year marked down Byju’s valuation to $5.9 billion, a far cry from the troubled edtech company’s peak valuation a few years ago at $22 billion.

Prosus reported revenue at $2.6 billion for the first half of FY2024, a 118% jump over the corresponding year-earlier period, while registering growth across multiple businesses as well as in most of the startups that it is invested in India.

The investment firm, however, reported a ‘significant fall’ in its internal rate of return (IRR) across its portfolio, at 5% in the first half of FY24, compared with 18% in the first half of FY22, because of a few large ‘underperformers’, according to its investor presentation.

The investor calculates IRR  for unlisted assets based on sell-side analysts’ consensus estimate on valuation, or the most recent post-money transaction valuation of an asset if analyst information is unavailable. None of its investments in India are listed. 

The bulk of Prosus’s India portfolio was in the green. It reported a 7% IRR for food-delivery platform Swiggy, 22% for executive-education platform Eruditus, 31% for business-to-business commerce platform ElasticRun, 30% for its payments arm PayU India, and 32% for e-commerce platform Meesho, according to its presentation.   

But Byju’s and Pharmeasy have been underperformers, with its investment in both under water.  Prosus said its IRR for Byju’s stood at -24%, and for Pharmeasy at -41%. Prosus has not yet sold stake in either of these two companies. 

Other companies where Prosus reported a paper loss include Delhivery, Hero, OLX Autos, Skillsoft, and StackOverflow. 

In October, Prosus participated in a Pharmeasy rights issue valuing the online pharmacy at sub-$1 billion. The impairment in Pharmeasy relates to this round.

Prosus declined to comment on Pharmeasy’s markdown on its books. 

“Pharmeasy is still an early stage business in India, a market that is ripe for tech startups, and we have conviction that Pharmeasy will become more valuable as it executes on its strategy, which has been refocused on the B2B operations and profitability,” a Prosus spokesperson said.

As for Byju’s, Prosus, along with two other board members, had walked away from Byju’s board in June citing the edtech company’s inability to fulfill its fiduciary duty. During its markdown of Byju’s in November last year, the investment was still not a loss for Prosus as it had put in $536 million for its stake in 2018.

In June, Prosus said Byju’s had not kept pace with “its reporting and governance structures” for a company of its scale.  

“Despite repeated efforts from our director, executive leadership at Byju’s regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters. The decision for our director to step down from the Byju’s Board was taken after it became clear that he was unable to fulfill his fiduciary duty to serve the long-term interests of the Company and its stakeholders,” Prosus said in July, in an explanation for why it left the Byju’s board the previous month.  

Meanwhile, an Economic Times report on Wednesday said Byju’s was in urgent need of working capital of $120 million to $130 million.

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Updated: 29 Nov 2023, 03:18 PM IST