BlackRock cuts Byju’s valuation by 95% to $1 billion

BlackRock has yet again cut the value of its holding in Byju’s, slashing the implied valuation of the Indian startup to $1 billion from $22 billion in early 2022, according to disclosures made by the asset manager.

At the end of October last year, BlackRock said it valued Byju’s shares at about $209.6 apiece, down from the peak of $4,660 in 2022. The asset manager, like other mutual fund investors, makes multiple disclosures about its portfolio in a year, but doesn’t explain its rationale behind any valuation adjustments. Its new valuation adjustment hasn’t been previously reported.

BlackRock, which owns less than 1% of Byju’s, didn’t immediately respond to a request for comment Thursday. Byju’s declined to comment.

This isn’t the first time BlackRock has cut the worth of its holding in Byju’s — and BlackRock isn’t the only investor that has severely downgraded how they value Byju’s, but the new adjustment is by far the most drastic. Prosus, which owns about 9% in Byju’s, said late last year that it valued Byju’s at “sub $3 billion.” At $22 billion, Byju’s ranked as India’s most valuable startup.

The valuation markdown is a stunning reversal in fortune for Byju’s, once the poster child of the Indian startup ecosystem. The startup, which spent more than $2.5 billion in 2021 and 2022 acquiring over half a dozen firms globally, was once showered a valuation as high as $50 billion by marquee investment bankers, TechCrunch earlier reported.

Byju’s has been backed by over a dozen movers and shakers in the industry, from Peak XV Partners to Lightspeed, UBS, and Chan Zuckerberg Initiative. The startup, which gained initial popularity in India because its tutors used intuitive ways — tackling complex concepts using real-life objects such as pizza and cake — has raised over $5 billion in equity and debt in the past decade.

Byju’s was preparing to go public in early 2022 through a SPAC deal that would have valued the company at up to $40 billion. However, Russia’s invasion of Ukraine in February sent markets downward, forcing Byju’s to put its IPO plans on hold, according to a source familiar with the matter. As market conditions worsened, so too did the business outlook for Byju’s. The company began facing mounting pressure from investors to address issues that it had previously left unresolved.

Byju’s today is reeling from a series of challenges: It’s struggling to raise capital, make payroll, and pay off its billion-plus debt. It missed its revenue target for the financial year ending in March 2022, the startup disclosed in a much-delayed account last month.

Byju’s CFO Ajay Goel left the startup in less than seven months to return to Vedanta in late October, following high-profile and abrupt departures of auditor Deloitte and three of Byju’s key board members in June. Prosus publicly slammed the Bengaluru-headquartered startup in July for not evolving sufficiently and disregarding the investor’s advice and recommendations despite repeated attempts.