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Baron Capital nearly halves Byju’s valuation, marks up Swiggy, Pine Labs

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US asset management company Baron Capital has almost halved its valuation of edtech major Byju’s.

The US-based company said that the reduction in the fair market value of its holding in Byju’s was due to recent events such as the change in the company’s auditor, resignation of three board members, and the withdrawal of Covid-19-related tailwinds for the sector.

Baron Capital has slashed the edtech’s unicorn valuation by 44.6 per cent to $11.7 billion as of June 30, from $21.2 billion as of March 31.

However, the company has marked up the valuation of foodtech and grocery delivery firm Swiggy and fintech platform Pine Labs.

It has marked up the value of its stake in Swiggy by 33.9 per cent to $8.54 billion from the preceding quarter, while that of Pine Labs has been increased to $4.92 billion as of June 30, up 10 per cent from a quarter ago.

“This reversal was the principal driver of our second quarter outperformance and we maintain conviction that India likely offers the most attractive long-term investment opportunity in the EM (emerging markets)/Asia universe,” said Baron Capital.

In the March quarter, Baron Capital had cut the valuations of its holdings in Swiggy and Pine Labs by 10 per cent and 5 per cent, respectively, as compared to their value on December 31.

Adding to Byju’s woes

Byju’s valuation was slashed due to weak performance that was driven by a marked slowdown in business momentum as Covid-related tailwinds that benefited digital education began to dissipate

“Weak performance was driven by a marked slowdown in business momentum as Covid-related tailwinds that benefited online/digital education have begun to dissipate. In addition, Byju’s announced that Deloitte had resigned as its auditor and will be replaced by BDO (another top five global audit firm),” said Baron Capital in the report.

“Three investor-appointed board directors also resigned during the quarter. These developments were deemed as material adverse events that required the fair market value of our holdings to be adjusted down accordingly,” it added.

This comes at a time when the company is grappling with issues of layoffs and raising funds.





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