HSBC invests $500 million in Dutch technology company Byju’s

Financial firm HSBC has raised serious concerns about the future of Indian edtech giant Byju’s, valuing Prosus’ nearly 10% stake in the company at zero amidst ongoing legal battles and financial troubles. Prosus, a Dutch-listed technology investment company, is a major investor in Byju’s with a $500 million stake.

In a note to investors, HSBC pointed to a combination of factors contributing to their pessimistic outlook on Byju’s. The company’s stake, previously valued at a significant discount, has now been deemed worthless due to legal entanglements and a cash crunch.

Byju’s recent $200 million rights issue, offered at a steep discount from its peak valuation, has raised concerns among investors. The company faces legal challenges in India, including a battle with the National Company Law Tribunal (NCLT) over raised capital.

Adding to the turmoil, Byju’s has initiated legal action against Prosus and other investors, seeking the removal of CEO Raveendran. The company’s financial struggles have also led to the departure of its India CEO, with founder Byju Raveendran taking on a more hands-on role in daily operations.

Furthermore, Byju’s faces legal challenges in the US from term loan B lenders over a $1.2 billion loan, with lenders reportedly petitioning a US court to initiate bankruptcy proceedings against Byju’s subsidiaries. The future of Byju’s remains uncertain as it navigates these legal battles and financial woes.