HSBC Believes That $22 Billion Byju’s Is Now Worth Zero

HSBC, in a recent assessment of the company, revealed that it believes the $22 billion Byju’s is now worth zero, citing financial mismanagement, missed sales targets, governance issues, and the exit of key auditors and board members.

HSBC Believes That $22 Billion Byju’s Is Now Worth Zero 1

In a recent research report, HSBC calculated that the $22 billion valuation of the Indian edtech behemoth Byju’s had now dropped to zero. BlackRock, one of Byju’s investors, has also written off its investment on its own. According to their estimates, Byju’s startup slide is among the most impressive ones in the past few years.

The Bengaluru-based business, which was formerly India’s most valuable startup, has had a difficult year. HSBC’s statement comes after that. Last year, Byju’s struggled to meet its financial reporting deadlines and, as a result of several governance concerns, eventually failed to reach its sales predictions by more than 50%.

These problems, together with the sudden departures of the company’s auditor and board members, caused a $1 billion fundraising plan to collapse.

One of Byju’s biggest backers, Prosus, openly criticized the firm, claiming that it had been “regularly disregarded advice” by the business. Amid the financial crisis, the business raised an additional $200 million this year at a post-money valuation of roughly $250 million; however, several of its biggest backers, including Prosus, are suing to contest the investment.

Thus, it makes sense that Prosus’ 10% ownership in the Indian business would be worthless according to HSBC, given the ongoing legal disputes and financial difficulties. The estimates from HSBC haven’t been made public before. Over the years, Prosus has invested over $500 million in Byju’s and hasn’t sold a single stake.

HSBC Believes That $22 Billion Byju’s Is Now Worth Zero 2
BlackRock disclosure

A handful of other startups are not nearly as valuable as they once were, according to the bank’s estimation.

According to HSBC’s assessment, the valuation of social commerce Meesho is expected to be $2.5 billion, down from $4.9 billion, online pharmacy Pharmeasy, which reached a peak of $5.6 billion in 2021, and the previous unicorn in logistics, ElasticRun, is valued at $800 million.

According to the bank, GoodHabitz should be valued at $100 million (down from $200 million) and Stack Overflow, a company that Prosus purchased for $1.8 billion last year, at $900 million.

“We apply a 50% discount to the latest funding round/acquisition price for assets where the last round is older than six months to account for the recent correction in similar edtech/SaaS companies’ public sector multiples,” HSBC wrote in the note.

Last year, GreatGameIndia reported that, according to a website tracking tech sector job cuts, five companies led by Byju’s laid off 70–75% of their workforce, with over 36,400 people losing their jobs in India in the past couple of years.

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