Sofina Further Lowering Our Valuation Of BYJU's

Once the poster child of the Indian startup ecosystem, BYJU's has recently found itself dealing with problems on several fronts. Since a couple months, the company has been openly criticised for maintaining inadequate corporate governance measures despite several notifications from major investors which led to several board of directors stepping down. Also, BYJU's has been dealing with a cash-crunch which has led to aggressive cost-cutting, employee dissatisfaction, and bad press. BYJU's has been trying to secure a fresh round of capital as well as sell both ‘EPIC' and ‘Great Learning' so that proceeds may be used to pay down the $1.2b term loan – both of these initiatives have not yielded any results. However, it should be noted that Sofina has already crystallised double digit returns on its investment in BYJU's through a partial exit during 2022. Opting to remain conservative, we further cut our BYJU's valuation down from $3.0b to $0.5b (€0.46b) which implies that Sofina's remaining stake of approx. 5.1% is worth €18.7m (post 20.0% illiquidity discount). The decline in BYJU's valuation has had a minimal impact on our TEVps and thus, we reiterate our BUY rating and €300.0 TP.