Prosus writes off 9.6% stake in BYJU'S amid decline in valuation

Tech investor Prosus NV on Monday reported that it wrote-off of its investment in BYJU'S, recognising a fair value loss of $493 million in the current financial year due to a decline in the edtech company's value for equity investors. The loss was recorded in Prosus NV’s other comprehensive income.

In September 2022, Prosus NV lost influence over BYJU'S, meaning it no longer has a decisive role in the financial and operating policies of the edtech giant. Consequently, the group recognised a gain on the loss of amounting to $22 million, which included the reclassification of accumulated foreign currency translation losses of $55 million. Following this loss of influence, the Prosus NV’s 9.6 per cent effective interest in BYJU'S was accounted for at fair value through other comprehensive income, with the investment valued at $578 million at that time.

BYJU'S has been a prominent player in the global education technology market, experiencing rapid growth and attracting substantial investments from global investors. However, the company has faced challenges, including regulatory scrutiny and financial instability, leading to fluctuations in its valuation.

Prosus NV's initial investment in BYJU'S was part of a broader strategy to diversify its portfolio and tap into the burgeoning education technology sector. The initial enthusiasm was fuelled by BYJU'S impressive growth trajectory and market potential. However, the subsequent decline in the company's valuation reflects the volatile nature of the edtech industry and the broader economic pressures impacting tech companies globally.

The write-off by Prosus NV underlines the challenges faced by investors in navigating the rapidly changing landscape of the education technology sector. It also highlights the importance of strategic adjustments in response to market dynamics.