NCLT halts Byju's rights issue, seeks shareholders' detail

New Delhi: The National Company Law Tribunal (NCLT) has restrained edtech firm and Byju’s brand parent Think and Learn from moving ahead with the ongoing rights issue started on May 11, effectively halting the process to maintain the status quo.

The Bengaluru bench of NCLT, in an order dated June 12, also asked Byju’s to submit complete details of its shareholders before and after the allotments of equities on March 2 as per the first tranche of rights issue.

According to investors who approached the tribunal, Byju’s proposed a second rights issue by way of an offer letter dated May 11 which opened on May 13 and was scheduled to end on June 13.

The tribunal said it “hereby restrains the respondents from going ahead with the present rights issue which is in progress” till the disposal of the main petition filed by investors.

“The respondents are further directed to keep the amounts collected so far since opening of the second rights issue in relation to this offer in a separate account which should not be utilised till the disposal of the main petition,” the order said.

A group of four investors — Prosus, General Atlantic, Sofina, and Peak XV — along with support from other shareholders, including Tiger and Owl Ventures, had approached the NCLT against the company management and the rights issue.

The company claimed to have received 100 per cent commitment for a USD 200 million rights issue in February.

The company initiated the rights issue at a 99 per cent lower valuation compared to its peak enterprise value of USD 22 billion.

According to investor sources, Byju’s first rights issue was for USD 200 million, which it failed to raise and therefore the company initiated the second round of USD 100 million.

“It is doubtful that they even raised USD 100 million from the first rights issue but that is the narrative that the company has pushed,” the investor source said on the condition of anonymity.

Queries sent to Byju’s received no response but sources privy to affairs at Byju’s said that the ongoing rights issue is not the second tranche of fundraise but the continuation of the February rights issue.

“The investors could invest only on pro-rata basis based on their shareholding in Byju’s. Some of the investors did not participate, therefore the issue was not 100 per cent subscribed, though the company received commitment for subscription worth USD 200 million.

“The present rights issue is continuation of the same on super pro-rata basis, which means the left-out portion can be subscribed by existing shareholders,” a source close to Byju’s said.

Another source said Byju’s had stated that it received a commitment for a USD 200 million subscription.

The NCLT has listed the matter for hearing on July 4.