Byjus: BlackRock, Invesco write down Byju and Swiggy assets as technical estimates are correct

American investors have reduced the value of their investments in Byju’s and Swiggy last year, according to the latest US documents. BlackRock reduced the value of its investment in Byju’s by almost 50%, while Invesco cut its investment in food delivery firm Swiggy by 23%.

BlackRock valued a single share of Byju at $2,400 at the end of December 2022, up from $4,600 last April, bringing the company’s valuation to just over $11 billion.

BlackRock, the world’s largest asset manager, owns less than 1% of the firm. Byju’s, India’s most valuable private startup, was valued at $22 billion at the time of the last fundraiser in October 2022.. This is the first markdown for the company, which as a whole has been scrutinized due to delays in reporting earnings. business practices such as misselling their courses and the way they recognize their earnings.

According to documents seen by ET, Invesco valued Swiggy’s shares at $4,759 a share in October 2022, up from $6,212 in July 2022, bringing the company’s valuation to $8.2 billion. Swiggy was valued at $10.7 billion after closing a $700 million round in January 2022.

Rival Zomatowhich went public in 2021, was valued at about $5.5 billion to close on Friday. BSEafter the market capitalization peaked at $17 billion in November 2021.

Periodic assessment reviews

Discover stories that interest you

US institutional investors and the mutual funds they manage review the value of their assets on a regular basis. Flipkart, Olya, Paytm others were revised down by mutual funds in 2016 amid a relatively less dramatic funding slowdown at the time.

Byju shares were valued at $2,855 a share last October, according to BlackRock documents. Byju’s markdown was first reported by The Arc.

Byju’s and Swiggy didn’t answer questions.

ET reported earlier this month that Byju’s sought to refinance its $1.2 billion term B loan at a higher rate.which is due to delays in the publication of results for fiscal years 21 and 22, which forced lenders to withdraw loans.

edtech is planning another round of convertible bond fundraising and has been in talks with existing investors and sovereign and pension funds to arrange funding. Generally, a company is not valued when funds are raised through convertible notes. Participating investors receive a valuation discount when a company raises a new round of equity funding or if a liquidity event occurs, such as an initial public offering (IPO).

Loss of Edtech funding
Byju’s is cutting costs to contain losses. About 3,500 people have been laid off in at least two rounds of layoffs.

The edtech platform posted a loss of Rs 4588 crore for the year ended March 2021. compared to Rs 262 crore in the previous financial year. Adjusted operating revenue was Rs 2,280 crore, 48% below the forecast revenue of around Rs 4,400 crore reported in the unaudited results of Think & Learn Pvt Ltd, the parent company that operates Byju’s.

ET reported on March 20 that Byju’s is in talks with lenders to raise interest rates on the Term Loan B (TLB). at least 200-300 basis points (bp) at Libor plus 550 bp floating interest rate. The report says that the additional interest rate that Byju’s is discussing is in excess of 550 basis points. A basis point is equal to 0.01 percentage points.

TLB, which Byju’s is reviewing, was the largest organized Indian startup at the time it was raised, but the loan was not rated. The company, which is backed by major investors including General Atlantic and Prosus, has taken out a loan to finance its acquisitions and expansion in the North American market.

Shortly thereafter, Byju’s needed to improve its financial situation. The company then pulled back on some of its new investments given weaker macroeconomic conditions, with some of its potential US acquisitions also put on the back burner.

Edtech companies like Byju’s, Unacademy and Vedantu, which boomed during Covid-19, were hit hard when the pandemic receded and schools and other offline education centers reopened. While overall startup funding has slowed, edtech firms are taking the brunt. Edtech startups received $3.1 billion in venture capital funding in 2022, up from $5.4 billion in 2021, a drop of more than 42%, according to data sourced from Tracxn.

On Thursday, ET reported that, backed by SoftBank, Unacademy undertook another round of layoffs, laying off 12% of its workforce. as he faces the need to reduce the rate at which cash is burned. Unacademy founder and CEO Gaurav Munjal announced on Friday that management, including the founders, will receive a permanent pay cut of up to 25%.

Changes and challenges
Swiggy’s valuation drop comes amid trouble for the SoftBank-backed company. He had laid off 380 employees this year as its core food delivery business slowed. Meanwhile, rival Zomato after relaunching its Zomato Gold loyalty program started to regain the market share it lost in the second half of 2022 to Swiggy.says in a note by HSBC Global Research.

Swiggy Instamart’s fast-paced commerce arm is lagging behind Zomato’s grocery delivery rival Blinkit, according to a report from brokerage firm Jefferies. The report added that in the first six months of 2022, Instamart recorded a gross merchandise value (GMV) of $257 million compared to the $270 million GMV recorded by Zomato-owned Blinkit.

ET reported on Friday that Instamart CEO Kartik Gurumurti to step down at the end of April. Swiggy co-founder Fani Kishan Addepally is scheduled to take over. Swiggy confirmed the development to ET.