Prosus writes off investment in Byju's, records $493 million loss

This would be perhaps the first such large write-off announced by a large institutional investor in India

Investment firm Prosus has written off the value of its 9.6 per cent stake in edtech company Byju’s. This is perhaps one of the biggest writeoffs in tech startups by a marquee investor.

Prosus recorded a fair value loss of $493 million on account of its investment in the company, the Dutch tech investor said in its FY24 annual report on June 24. “In this financial year, the group wrote off the fair value of its 9.6 per cent effective interest in Byju’s, due to the significant drop in value for equity investors. A fair value loss of $493 million was recognised in other comprehensive income in the current year,” said Prosus in its annual report.

 

The firm had put $536 million in Byju’s across multiple rounds since 2019 for its stake. “We impaired Byju’s down to zero at the end of FY24. The fair value written down was $493 million for FY24,” said a Prosus spokesperson. 

“We have written down Byju’s primarily because we have inadequate information on the company’s financial health, liabilities, and future outlook,” the Prosus spokesperson said in response to a query.

An industry person in the know said: “We have seen several writedowns and writeoffs but not of such value.”

To a question by the media during its post-earnings call on Byju’s, Prosus interim Chief Executive Officer Ervin Tu said: “We are seeking protection for our rights and other investors beyond the rights issue. We have hope for the company’s outlook and the key for us is to change the governance of the company. That’s what has driven our actions.”

Byju’s has seen many valuation markdowns from its investors, including Prosus, for the past couple of years.

In November 2023, Netherlands-based tech investor Prosus NV marked down Byju’s’ valuation to under $3 billion. In November 2022, Prosus had cut down Byju’s’ valuation to $5.9 billion. In 2023, a director of Prosus stepped down from Byju’s’ board.

Swiggy’s revenue grew 24%

Prosus is seeing promise in some of its other investments here. It has invested $7 billion in India in companies such as Swiggy, PayU, and PharmEasy.

Swiggy’s revenue grew 24 per cent between January and December 2023. The company’s gross order value (GOV) grew 26 per cent year-on-year (Y-o-Y) during the period.

Prosus is Swiggy’s largest investor, with a 32.6 per cent stake in the company. The investor, however, declined to comment on its plan for an initial public offering (IPO).

“We are a big believer in Swiggy. We can’t comment on if we are going to sell in the IPO or not. We really like the business and we hope we can help the business’ performance,” said a senior executive of Prosus in the post-earnings call.

“The quick-commerce business, GOV, grew much ahead of the ecommerce industry, led by geographical penetration (now 487 active dark stores across 26 cities) and stock-keeping unit (SKU) expansion (over 9 500 unique items now listed on the platform),” said Prosus in its Annual report.

PayU’s revenue grew 22%

Prosus reported payments and fintech major PayU’s consolidated revenue grew 22 per cent to $1.1 billion in FY24 on the back of its payment service provider (PSP) businesses in Turkey and India, along with India credit.

Core PSP services account for 88 per cent of the payments and fintech revenue for the Netherlands-based investor. It comprises payments operations in PayU India and PayU Global Payments Organisation (GPO).

“Strong revenue growth and improved profitability were driven by improved operating leverage and effective cost control, despite regulatory hurdles in India,” the firm said in its annual report.

India is the largest market in Prosus-backed PayU’s PSP business. It accounted for 46 per cent of core PSP revenues and 60 per cent of total payment volumes.

Its revenue from fintech operations in India grew 11 per cent on a Y-o-Y basis to $444 million.

Cutting down

> Prosus had invested $536 million in Byju’s across multiple rounds since 2019 for 9.6% stake

> Wrote down Byju’s primarily due to inadequate information on the company’s financial health, liabilities, outlook

> Among four investors that have moved NCLT against Byju’s management and its $200 million rights issue

>Have stakes worth $7 billion in India across companies such as Swiggy, PayU, and PharmEasy