A key Byju investor has expressed his disappointment in 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 on Tuesday that Byju’s “reporting and governance structures were not sufficiently developed for a company of its scale” and “disregarded advice and recommendations”.
Prosus, the largest outside investor in the Bengaluru-based startup, said its director stepped down from Byju’s board after it became clear “he was unable to fulfill his fiduciary duty to serve the long-term interests of the company and its stakeholders”.
Byju’s, which at a valuation of $22 billion is India’s most valuable startup, had earlier played down why Sequoia India, Prosus and the Chan Zuckerberg Initiative had left its board, saying the directors “had to vacate” the board because their stakes fell below the minimum limit set in the share deal.
Statement below from Prosus:
BYJU’S grew significantly since our first investment in 2018, but, over time, its reporting and governance structures were not developed enough for a company of that scale. Despite repeated efforts by our Director, the executive leadership at BYJU’S regularly ignored advice and recommendations regarding strategic, operational, legal and corporate governance matters. The decision for our director to step down from the BYJU Board was made 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 located at the intersection of India and Education, two very important and strategic investment areas for Prosus. Although we no longer have a representative serving on the Company’s Board, we continue to believe in BYJU’s potential and its role in revolutionizing access to quality education in India and around the world. As a shareholder, Prosus will continue to protect its rights, cooperating with other shareholders and government authorities to protect the long-term interests of the Company and its stakeholders.
Global auditor Deloitte also left Byju’s last month, saying it had received “no communication” from Byju’s on the status of “audit readiness of the financial statements and basic books and records for the year ended March 31, 2022.”
Tuesday’s harsh statement from Prosus is remarkable for many reasons. Prosus is one of Byju’s earliest backers and never sold any of its shares in the company. Prosus, which has also reduced the value of its stake in Byju’s, said today that it has invested billions in India and remains a “long-term and committed supporter” of Indian entrepreneurship.
“As the companies and sectors we work with in India and around the globe are high-growth and rapidly evolving, our stakeholders rightly expect us to hold ourselves and our investee companies to the highest standards of corporate governance and reporting,” he added.
More to follow.