Prosus cuts Byju’s valuation, hikes Mensa’s, writes off ZestMoney

Dutch-listed global investment group Prosus has significantly cut down its valuation of education technology firm Byju’s, while raising that of Bengaluru-based digital brand accelerator Mensa’s. The group also wrote off its stake in consumer fintech firm ZestMoney, while disclosing an 80% loss in its share of investments in food delivery platform Swiggy.

Here is a glimpse into what the group’s annual earnings report for the year ended March 2023 disclosed about its key investments in India:

Byju’s

Prosus, which has a 9.6% stake in Byju’s, slashed the value of its holdings to $493 million, effectively valuing the edtech firm at about $5.1 billion.

In November last year, the group’s fair value of $578 million for its holdings had valued Byju’s at about $6 billion.

To be sure, different shareholders may value a private firm differently in their books. There may also be a significant difference in how a major shareholder and a minority shareholder value shares in the same firm.

Mensa

The group has raised the valuation of its $25 million investment in digital brand accelerator Mensa to $27 million. Prosus Ventures had made the investment in 2021, according to the company.

Mensa Brands became a unicorn–a privately held startup with a valuation of $1 billion-in 2021 within just six months of its launch.

ZestMoney

Prosus has completely written off its investment in the consumer fintech firm. It had last valued its investments in the company in fiscal 2022 (FY22) at $38 million.

The global investor hasn’t attributed any reason for writing off its investment, though analysts suggest that the failed bid by Walmart-owned digital payments firm PhonePe to acquire the buy-now-pay-later platform and subsequent failure to raise funds could be the causes.

Last month, three founders-Lizzie Chapman, Priya Sharma and Ashish Anantharaman-announced that they were leaving the firm.

Swiggy

Prosus said in its report that its share of trading losses in Swiggy rose 80% to $180 million in FY23, primarily due to its investment in quick-service arm Instamart. The group had reported trading losses of $100 million a year ago.

The investment group owns a 33% stake in the food delivery platform, indicating that Swiggy’s losses in FY23 rose to about $545 million from about $300 million a year ago. Swiggy hasn’t reported its numbers yet, but chief executive officer Sriharsha Majety had said in a blog post last month that Swiggy’s food delivery business had turned profitable as of March 2023.

“Our sharp focus on innovation, coupled with strong execution has led to yet another milestone-As of March 2023, Swiggy’s food delivery business has turned profitable (After factoring in all corporate costs; excluding employee stock option costs),” Majety wrote, adding, “This is a milestone for food delivery globally, not just for us, as Swiggy has become one of the very few global food delivery platforms to achieve profitability in less than 9 years since its inception.”

PayU

Online payment and service platform PayU India posted an FY23 revenue of $399 million, a 31% jump from a year ago amid an expansion in enterprise and small and medium-sized businesses and diversification into new segments, Prosus said in its report.

“PayU’s Indian credit business continued to scale quickly, issuing $742 million in loans, up 47% from a year ago,” Prosus said in the report. This translates into a loan book of $256 million as on 31 March 2023, it added.

Cross-holding structure

Meanwhile, the Netherlands-based Prosus also announced that it would end a cross-holding structure with its South African parent Naspers. Investors cheered the move as shares of both companies rallied on the news.

The cross-holding structure had been put in place since 2021 via a share-swap deal. Several minority investors in Naspers were irked at the complexity of the cross holding.

The full-year earnings at the companies showed a decline in profit owing to lower earnings at Chinese software, gaming and social media giant Tencent, in which Prosus has a 26% stake.

Prosus’ net profit for the year to March declined to $10 billion from $18.6 billion, primarily dragged down by Tencent.

Revenue in select e-commerce companies that Prosus considers part of its key operations grew by 10% to $5.8 billion, the company said, while its trading loss increased to $617 million.