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US-based asset management company Baron Capital Group has reduced the valuation of its stake in edtech firm BYJU’S by 99.85% as of March 31, 2024, according to filings with the US Securities Exchange Commission.

The decline in Baron Capital‘s investment value resulted in the venture capital firm sharply cutting the edtech company’s valuation to nearly $24 million. This marks a decrease from its peak valuation of $22 billion in October 2022, aligning with the valuation concern around BYJU’S $200 million rights issue.

Baron Capital, holding 15,334 shares through Baron Emerging Markets Fund and 9,201 shares via Baron Global Advantage Fund, has appraised its investment in BYJU’S at $75,485 and $45,294, respectively.

Given the current share price of around $4.92 and a total outstanding share count of 4,808,266 (as per Tracxn), BYJU’S is estimated to be valued at approximately $23.7 million.

Back in January, BYJU’S initiated a rights issue to secure $200 million via equity, pegging at a pre-money valuation of about $20 million. Consequently, the enterprise valuation was expected to be approximately $220 million following the round’s conclusion.

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BYJU’S rights issue: a much-needed lifeline or an overplayed hand?

The asset management company’s (AMC) quarterly report highlighted that both Snowflake and “a final write-down of Think & Learn” impacted it by over 50 basis points each. Regarding the fair value measurement of BYJU’S, the AMC specified “Rights Offering Price” as the unobservable input.

Unobservable inputs in fair value accounting use the best available information to price assets or liabilities when market data isn’t available.

This development comes as the edtech company hopes for a revival amid increasing challenges. 

Besides a severe liquidity crunch, BYJU’S is locked in a tussle with a clutch of prominent investors, including Prosus, General Atlantic, Chan Zuckerberg Initiative, and Peak XV, which have sought to void the $200-million rights issue initiated in January by appealing to the National Company Law Tribunal.

BYJU’S is also engaged in a legal dispute with some of its investors in the Karnataka High Court.

Meanwhile, last month, the company announced that Mohandas Pai, former CFO and Board Member of Infosys, and Rajnish Kumar, former Chairperson of State Bank of India, will not renew their contracts as advisory board members at BYJU’S.

Separately, Baron Capital marked up the valuation of its stake in Swiggy to $109.16 million from its original investment of $76.77 million.