Prosus breaks silence on Byju’s, says Indian edtech ‘oft-ignored advice’
A major Byju investor has noted his disappointment with the edtech giant’s reporting and governance practices, just weeks after all independent members left the startup’s board. Prosus, one of India’s most prolific investors, said in a statement on Tuesday that Byju’s “reporting and governance structure is not sufficiently developed for a company of that scale,” and “ignored advice and recommendations” from directors despite repeated attempts.
Prosus, the largest external investor in a Bengaluru-headquartered startup, said its director was stepping down from Byju’s board after it became clear that “he was unable to fulfill his fiduciary duty to serve the long-term interests of the company and its stakeholders.”
Byju’s, which at $22 billion is India’s most valuable startup, previously downplayed the reasons why Sequoia India, Prosus and the Chan Zuckerberg Initiative had left its board, saying directors “should vacate” the board because their shareholdings fell below the minimum threshold set in shareholding agreements.
The statement below is from Prosus:
BYJU’S has grown rapidly since our first investment in 2018, but over time, its reporting and governance structures have not developed sufficiently for a company of such size. Despite the repeated efforts of our Directors, the executive leadership at BYJU’S regularly ignores suggestions and recommendations relating to strategic, operational, legal and corporate governance issues. Our Director’s decision to step down from the BYJU Board was taken after it became clear that he was unable to fulfill his fiduciary duty to serve the long term interests of the Company and its stakeholders.
BYJU’S is at the crossroads between India and Education, two very important and strategic areas of investment for Prosus. Although we no longer have representatives serving on Company Boards, we continue to believe in the potential of BYJU and its role in revolutionizing access to quality education in India and around the world. As a shareholder, Prosus will continue to assert its rights, working with other shareholders and government authorities to safeguard the long-term interests of the Company and its stakeholders.
Global auditor Deloitte also left Byju last month, saying it had not received “any communication” from Byju regarding the status of “audit readiness of the financial statements and underlying books and records for the year ended March 31, 2022.”
Tuesday’s scathing remarks from Prosus are extraordinary for many reasons. Prosus was one of Byju’s earliest backers and never sold his stake in the company. Prosus, which has also slashed the value of its stake in Byju’s, said today it has invested billions in India and remains a “loyal and longtime supporter” of Indian entrepreneurship.”
“While the companies and sectors we work in in India and around the world grow high and thrive, our stakeholders expect that we hold ourselves and our investment firms to the highest standards of corporate governance and reporting,” he added.
More to follow.
