Loss of ‘significant influence’ over Byju’s prompts accounting change by Prosus

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Prosus, the Dutch-listed arm of South Africa-based conglomerate Naspers, said it stopped equity accounting of two of its portfolio firms, Byju’s and Udemy.

Prosus said in its investor presentation on Wednesday that from September 2022 it lost its “significant influence” over Byju’s with a less than 10% stake in the company.

“The group accounts for its 9.67% effective interest in Byju’s at fair value through other comprehensive income. The fair value of the Byju’s investment, subsequent to the loss of significant influence, is $578 million,” it said. “In September 2022, the group lost significant influence in Byju’s as it no longer exerts significant influence over the financial and operating policies of the entity. The group recognised a gain on disposal of the associate of $22 million, including a reclassification of the accumulated foreign currency translation losses of $55 million.”

Effectively, this is a change in accounting policy and not a markdown in the valuation.
Byju’s was last valued at $22 billion after
raising $250 million in October. ET also
reported the company was in talks to raise up to $500 million through convertible notes – a form of investment that would not require the company to be ascribed an explicit valuation.

Prosus still has a seat on Byju’s board but has lost certain rights now that it owns less than 10% in the edtech firm, as against 11% at the start of the year.

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Similarly, it pegged the fair value of its investment in Udemy — in which it holds little over 12% — at $207 million.

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