According to the investment giant, Prosus, it is envisaging a huge write-off on its investment in embattled edtech company Byju's, pegged at a loss of $493 million. Drivers of the core headline earnings growth, which helped investors better understand the performance of Prosus—particularly the group's underlying businesses—were explained by the Amsterdam-headquartered company.
"A fair value loss of $493 million was recognised in other comprehensive income in the current year," Prosus informed.
Previously, Prosus had a residual interest of 9.6% in Byju's, which it accounted for at fair value through other comprehensive income. After losing significant influence over Byju's financial and operating policies in September 2022, the Prosus Group updated the fair value of this investment to $578 million.
"The group accounts for its 9.6 per cent effective interest in Byju's at fair value through other comprehensive income. The fair value of Byju's investment subsequent to the loss of significant influence is $578 million," Prosus wrote in its annual report.
With mounting financial pressure, Byju's had set a target to raise $200 million through a rights issue that would cut its valuation drastically from $22 billion in the last valuation. However, the National Company Law Tribunal has banned Byju's from utilizing funds raised through the rights issue in view of pending litigation against it.
"We assign zero value to Byju's stake amid multiple legal cases and funding crunch," according to the HSBC note.
This month, HSBC had also revalued Prosus' almost 10 percent stake in Byju's as zero, citing ongoing litigation and financial crisis around the edtech firm.
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