Prosus has hit out at the management of BYJU’S, one its biggest investments in the growing educational technology sector, a month after it and other major investors quit the start-up’s board.
The international unit of Naspers, has invested $536m (R9.48bn) in Bangalore, India-based BYJU’S since 2018, but on Tuesday hit out at the company’s reporting and governance in a strongly worded statement.
“BYJU’S grew considerably since our first investment in 2018, but, over time, its reporting and governance structures did not evolve sufficiently for a company of that scale,” Prosus said.
“Despite repeated efforts from our director, executive leadership at BYJU’S regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters.
“Prosus will continue to assert its rights, collaborating with other shareholders and government authorities to safeguard the long-term interests of the company and its stakeholders,” it added.
Prosus, which is listed on Amsterdam’s Euronext exchange and the JSE and valued at about R2.7-trillion, is the latest SA company to publicly express its dissatisfaction with one of its associate companies.
In recent weeks, MTN and a group of investors have voiced concerns about alleged governance issues at Africa’s largest cellphone tower business, IHS. The issue has since escalated after French investment firm Wendel filed a case with the Grand Court of the Cayman Islands that seeks to force a vote at IHS Towers over governance proposals.
BYJU’S was founded in 2011 and has become a leading platform offering personalised learning programmes for pupils. The app now has more than 150-million users and more than 20,000 teachers, with a presence 120 countries.
BYJU’S was reportedly valued at $22bn in 2022, making it one of India’s most valuable companies. It has reportedly spent more than $2.5bn on expansion in recent years, a move that hasn’t been favourably received in some quarters, according to media reports, and the group is now said to be worth about $5bn.
Moreover, it has postponed plans for a stock market listing and retrenched thousands of workers as part of a cost-cutting drive.
Education technology (edtech) became a focal point for Prosus during the Covid-19 pandemic as it sought to leverage the growth of online learning in addition to its investments in fintech, classifieds and food delivery.
Prosus’ largest acquisition yet saw it buy Stack Overflow, a knowledge-sharing platform for developers and technologists, for $1.8bn in mid-2021.
Prosus vacating its seat on BYJU’S board of directors a month ago, as did Sequoia India and Chan Zuckerberg Initiative.
“The decision for our director [Russell Dreisenstock] to step down from the BYJU’S board was taken after it became clear that he was unable to fulfil his fiduciary duty to serve the long-term interests of the company and its stakeholders,” it said at the time.
Still, Prosus hasn't reduced its stake in BYJUS’s, saying it believes in the potential of the start-up. “BYJU’S sits at the intersection of India and Education, two very important and strategic areas of investment for Prosus,” it said.
“Prosus is a long-standing and committed supporter of Indian entrepreneurship, investing billions in India and collaborating with dozens of dynamic businesses and founders for nearly 20 years.
“Although we no longer have a representative serving on the board of the company, we continue to believe in the potential of BYJU’S and its role in revolutionising access to quality education in India and around the world.”
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