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Once counted among India's most successful startups, Byju's is
caught in what many see as a governance crisis after it lost
board members representing three global investors - Peak XV,
Prosus NV, and the Chan-Zuckerberg Initiative - and auditor
Deloitte last week.
While the board members did not give a reason for stepping down,
Deloitte said it was severing ties with Byju's over delays in
disclosing some financial statements. The company was also
raided over suspected violations of foreign exchange laws.
Bloomberg News said on Tuesday Byju's is offering benefits like
preferential treatment in the case of liquidation to the
potential investors, adding that none of its existing
shareholders have that option.
Reuters could not immediately verify if existing shareholders in
Byju's have that option.
It was not clear if founder Byju Raveendran will ultimately
secure a capital influx, the sources, who asked not to be named
as the information isn't public, told Bloomberg News.
Byju's did not immediately respond to a Reuters' request for a
comment.
A part of the fund to be raised will likely be used by the
company to pay down a disputed $1.2 billion term loan, the
report added. Byju's and its lenders are involved in legal cases
in the United States over the restructuring of the loan.
The startup, valued at $22 billion last year, has asked
investors to reconsider quitting its board, three sources with
direct knowledge of the situation told Reuters last Friday.
Byju's Founder and chief executive Byju Raveendran plans to
reconstitute the company's board only after completion of the
fundraise as new investors may possibly occupy some of the
vacancies, Bloomberg said in its report.
(Reporting by Mrinmay Dey and Varun Vyas in Bengaluru; Editing
by Sonia Cheema and Nivedita Bhattacharjee)
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