Also in the letter:
■ Four Softbank firms on-track to go public
■ Pepperfry cofounder Ambareesh Murty passes away
■ ZestMoney raises fresh capital from existing investors
Byju’s may fork out additional $50-60 mn towards TLB settlement
Settling the ongoing dispute over its $1.2 billion term loan B (TLB) may prove to be more expensive for Byju’s. The distressed edtech major may have to cough up an additional $50-60 million to service the increased interest rate it has offered to finalise the new terms of the disputed TLB, sources who have apparently calculated the additional interest payout told ETtech.
Adding interest to injury: Byju’s has been talking with its TLB creditors to freeze new terms for the loan, which has been a sore point for the edtech firm for the past few months.
People close to the matter said the total interest rate being proposed by Byju’s is working out to around 11-11.50%. The creditors are yet to sign off on this, and discussions are ongoing between both parties, the people added.
While the interest rate is yet to be finalised, the next question that arises is how Byju’s will finance this payout. People said this is higher than the initial rate offered by founder Byju Raveendran to pacify lenders.
Background: Byju’s raised the TLB in November 2021 at a floating interest rate of Libor plus 550 basis points (bps). The additional interest rate being discussed by Byju’s is on top of this. A basis point is 0.01 percentage point. ET first reported on March 20 that Raveendran had offered an increased rate of around 200 bps, but creditors did not agree.
Catch up quick: Last month, creditors who own more than 85% of the $1.2 billion loan, had issued a statement saying they have agreed to work with the edtech firm to finalise new terms by August 3. While the deadline has passed, no announcement has been made yet.
Fund hunt: Multiple sources have told ET that Byju’s has been working to secure new funds but its myriad troubles related to test prep subsidiary Aakash, TLB lenders, as well as statements from investors like Prosus on corporate governance issues have affected the process.
MPL lays off 350 due to increase in GST burden
MPL cofounders Shubh Malhotra and Sai Srinivas
Online real-money gaming platform Mobile Premier League (MPL) has announced it will lay off 350 employees. This comes in the wake of the online gaming sector being hit last week with 28% GST on the full deposit value.
Taxing times: The company’s co-founder and CEO, Sai Srinivas, in an email to his employees said that the new tax rules will increase the tax burden on the company by 350-400%. “As a business, one can prepare for a 50% or even 100% increase, but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions,” Srinivas’s mail read.
The company’s variable costs involve people, servers, and office space. To keep the business going, these expenses need to be lowered, Srinivas said in his mail.
Despite trimming server and office costs, people costs would still have to be cut, and the company would have to “let go of around 350 of you,” the email said.
The root cause: In an unexpected move on July 11, the government slapped 28% GST on the total value of online gaming transactions, rejecting the industry’s request that it be taxed on actual earnings from user fees.
Following this development, companies and investors in the online gaming sector reached out to the government and urged a reconsideration of the tax, to no avail.
SoftBank CFO: Four Indian portfolio companies on track to go public
Navneet Govil, CFO, SoftBank Vision Fund
SoftBank’s Vision Fund 2 (SVF 2) has made profits after six quarters. ETtech spoke to Navneet Govil, managing partner and CFO at the fund. Here are the top takeaways.
India IPO pipeline: Govil, after announcing SoftBank’s earnings for the June quarter in Tokyo, said the fund’s top India bets are lining up for the bourses.
Which are these?
- Food and grocery delivery firm Swiggy.
- Eyewear retailer Lenskart.
- Omnichannel retailer FirstCry.
- Business-to-business focussed commerce startup OfBusiness.
Quote, unquote: “Two-thirds of the portfolio is already generating or will be generating cash, without the need for incremental capital. A fourth of the portfolio is showing top-line growth of more than 50%, while 40% of the portfolio clocked top line growth of more than 25% in this market,” Govil told us.
Public exit: Govil said that once the portfolio firms go public SoftBank would, at some point, sell its shares in order to monetise. “Uber is a good example, where we invested $7.7 billion and have completely exited now. We will of course wait for the lock-in period to get over,” he added
Selling spree: SoftBank has been selling stake in both public and private entities in India. It recently sold a part of its holding in Lenskart during a $600 million funding round, most of which was through a secondary share sale. There have also been talks with investors to dilute its holding in FirstCry in a pre-IPO deal, as ET had reported earlier.
SoftBank is estimated to have snagged $90-100 million from the Lenskart deal and in March, it raked in around $130 million by liquidating shares in logistics firm Delhivery. It also part-sold its stake in Paytm, worth $180-200 million.
Pepperfry cofounder Ambareesh Murty passes away after cardiac arrest
Pepperfry cofounder and chief executive Ambareesh Murty passed away in Leh on Monday night after a cardiac arrest, Ashish Shah, cofounder of the omnichannel furniture retailer, revealed in a tweet on Tuesday morning.
Word-for-word: “Extremely devastated to inform that my friend, mentor, brother, soulmate @AmbareeshMurty is no more. Lost him yesterday night to a cardiac arrest at Leh. Please pray for him and for strength to his family and near ones,” Shah tweeted.
Last Ride: 51-year-old Murty, an avid biker, was on a road trip to Ladakh and had posted a reel titled ‘Motorcycle Diaries (why Me :)?)’ on his Instagram account on Monday. In the video, he was all praise for Ladakh’s smooth roads.
Preparing for an IPO: Murty started Pepperfry with Shah in 2012. The company soon became one of the leading online furniture retailers in the country. He was planning to take Pepperfry public and had been working on the company’s IPO since last year. Appointed as eBay’s country manager for India in 2008, he quit three years later to set up Pepperfry.
Condolences: Reminiscing about the time they spent together, Ashish Goel, cofounder and CEO of Urban Ladder, said: “Ambareesh and I shared the journey of shaping our industry for the last 11-12 years. Ambareesh was a super sharp, high-commitment, high-integrity entrepreneur, someone I grew to respect. We would meet every 6-12 months, with no agenda really. I will remember Ambareesh as thoughtful, kind, straightforward, funny and very authentic.”
Flipkart Group CEO Kalyan Krishnamurthy recalled their days at eBay: “I worked with Ambareesh for close to five years during my time at eBay. He was an inspiring leader, problem-solver, and was always there for his people.”
ZestMoney raises fresh capital from existing investors
Abhishek Sharma, CEO, ZestMoney
After months of uncertainty, things are looking up for beleaguered pay-later startup ZestMoney. The firm said it has secured fresh capital from existing investors Quona Capital, Omidyar Network, Flourish Ventures, Zip, and Scarlet Capital as it looks to continue operations.
Lifeline: ET had reported on July 4 that the company had raised $5-7 million from its existing backers. ZestMoney did not disclose the amount it had raised, but this round could be a lifeline for the startup after a proposed acquisition deal with PhonePe fell through and its founders moved on.
CEO optimistic: “This capital—combined with the unwavering commitment of our more than 150-strong team—enables us to successfully serve our consumers, merchants, and lender partners, while continuing to keep non-payment rates at under 2.5% in the fastest-growing EMI market globally,” said Abhishek Sharma, the newly-appointed chief executive of ZestMoney.
Tech layoffs ease in India & US, but companies go slow on hiring
Big Tech job cuts are on the decline in the US since the major layoffs earlier this year, and according to industry experts, the worst of India’s layoffs might be mostly over as well. However, companies are expected to keep concentrating on optimising their current resources and taking a cautious approach to hiring, except for specific specialised skills.
Expert speak: Most of the experts ET spoke to, are of the view that the layoff season in India’s tech sector is coming to a close. Sangeet Gupta, senior VP at Nasscom told ET that except for layoffs related to funding issues in startups, the environment of layoffs is “largely behind us”.
According to Anandorup Ghose, a partner at Deloitte India, the major wave of layoffs has largely passed. He attributed this to a more stable global economy and reduced risks of recession. Ghose also mentioned that most companies have already restructured their workforce as necessary.
Decline in hiring: Looking ahead, experts expect hiring levels to not reach the same heights as seen in FY21 or FY22. If hiring does take place, it will primarily focus on replacements or specialised skills.
Other Top Stories By Our Reporters
K Krithivasan, CEO and MD, TCS
TCS wins six-year-long Government e-Marketplace mandate: The six-year-long deal will target gross merchandise value-based milestones (GMV) during its timeline. The deal financials were not disclosed.
Cognizant retaining market share post the change of guard: Locally listed Infosys was expected to pull ahead of Cognizant this year in the revenue sweepstakes, building on the 15% annual growth logged over past two years, but a pronounced tempering in sales guidance by India’s second-biggest software exporter will likely allow its Nasdaq-listed rival to widen the gap.
Global Picks We Are Reading
■ Microsoft’s AI red team has already made the case for itself (Wired)
■ Meta disbands protein-folding team in shift towards commercial AI (Financial Times)
■ The exclusive network behind India’s global tech success (Rest of World)
