💸 Prosus zeroes out BYJU’S stake; Private credit, public concerns

The most interesting news selected specially for you! 30 June 2024 [View in Browser]( POWERED BY Hello, Now, startups and enterprises can enhance their brand engagement by partnering with YourStory and advertising on our YS Buzz and Weekly Wrap newsletters. [Click here]( to know more. In today's newsletter, we will talk about: - Prosus zeroes out BYJU’S stake - Private credit, public concerns - Expanding access to affordable education - Robotic solutions for urban water sanitation - A spirit that transcends borders Here’s your trivia for today: What is the coldest place in the universe? --------------------------------------------------------------- Investments Prosus zeroes out BYJU’S stake BYJU'S' largest institutional shareholder, has written off its entire investment in the once high-flying edtech startup, which sought new funding at a 99% discounted valuation through a rights issue earlier this year. The Netherlands-based investment conglomerate, owned by South Africa’s Naspers, has invested $578 million in BYJU'S so far, with nearly $400 million coming from its first investment round in 2018. It held an over 10% stake until mid-2022. Investment outlook: - Prosus wrote off the fair value of its 9.6% effective interest in BYJU'S and recognised a fair value loss of $493 million in other comprehensive income in the current year, the company said in its annual report. - Prosus said the write-down was primarily because it has inadequate information on BYJU’S’ financial health, liabilities, and future outlook. - Meanwhile, the investment group maintained a strong outlook on IPO-bound food delivery platform [Swiggy]( citing improvement in operational leverage, and reported appreciating investments in Meesho, ElasticRun, and Urban Company. [Read More]( --------------------------------------------------------------- From the CapTable The not-so private worries with India’s expanding private credit market In recent years, private credit funds, which offer higher returns than their public debt counterparts, have become an increasingly popular investment avenue not just in India, but globally. The International Monetary Fund (IMF) defines private credit as “non-bank corporate credit provided through bilateral agreements or small ‘club deals’.” In April 2024, the IMF’s Global Financial Stability Repor[t]( noted that the private credit market, driven by specialised non-bank financial institutions, had surpassed $2.1 trillion in assets. These instruments, characterised by loans and debt financing provided outside traditional banking channels, have seen exponential growth in India as well. Data published by markets regulator Securities and Exchange Board of India, or Sebi, shows that nine private credit funds announced new fund raises aggregating more than $2 billion in the second half of 2023 alone. Industry forecasts predict that private credit assets under management (AUM) in India will reach $60-70 billion by 2028. Despite their growing popularity, though, it’s worth asking whether the public markets would assign high valuations to private credit funds should they queue up for an IPO, especially given the opaque nature of their operations. The assumption that higher returns for investors can be achieved by averaging overall portfolio performance, despite occasional credit mishaps and write-offs, is flawed. The private credit market is neither new nor innovative. It is merely a repackaging of one of the oldest financial products in history—the unlicensed local money merchants. Key Takeaways: - Private credit is an increasingly popular investment segment, not just in India but globally - In India, nine private credit funds announced new fund raises totalling more than $2 billion in the second half of 2023 - The rising popularity of private credit among investors can be attributed to the fact they offer higher returns than their public debt counterparts - However, their opacity coupled with a lack of regulatory oversight is cause for serious concern [Continue Reading]( --------------------------------------------------------------- Startup Expanding access to affordable education provides loans to small private schools that lack existing banking relationships but need the money for activities like expanding classrooms, constructing or upgrading labs, or buying school buses. “Most banks avoid underwriting loans for such schools due to preconceived notions about their creditworthiness and the challenges involved in the underwriting process,” explains Co-founder Steve Hardgrave. Supporting education: - Many of the schools that Varthana extends loans to provide education to children whose parents are farmers, daily wage labourers, auto-rickshaw drivers, and other workers from low-income backgrounds. - Over 11 years, Varthana has often provided multiple loans to the same schools, helping them expand from 300 students to as many as 2,000-3,000 students. - Varthana has recently ventured into the student loan sector. This new initiative focuses on helping students who have completed their 10th or 12th grades to pursue higher education or vocational training. [Read More]( --------------------------------------------------------------- Innovation Robotic solutions for urban water sanitation his final year at IIT-Madras studying a BTech in mechanical engineering and a master’s in product design, Divanshu Kumar worked on a project to develop a robot for cleaning manholes and septic tanks. This led to the birth of Solinas Integrity, a startup that has emerged from an IIT-Madras project to develop deep and climate-tech solutions that have sustainability at their core. Tech solutions: - Cleaning septic tanks is just one of the problems in urban water sanitation management, according to Kumar. Water and sanitation are interconnected, and all its assets, from pipelines to drainage systems, are underground. - Solinas Integrity built robotic solutions like HomeSep, India’s first septic tank and manhole cleaning robot and EndoBot—an “endoscopy” kind of robot for inspecting all kinds of pipelines. It also launched Swasth, a digital AI dashboard for assessment and data management of pipeline conditions. - Solinas has deployed its solutions in over 15 cities in nine states. It has also started applying to tenders to work directly with the government and has so far raised funding over seven rounds. [Read More]( --------------------------------------------------------------- Wine and Food A spirit that transcends borders There’s a new tequila brand on the block. Backed by actor-entrepreneur Rana Daggubati and musician-composer Anirudh Ravichander, along with Harsha Vadlamudi, Managing Partner of microbrewery Ironhill India, Loca Loka made its debut in select retail stores in Los Angeles, New York, and New Jersey, in the United States. For the trio, the name captures the essence of a spirit that transcends borders, offering a unique blend of traditions, tastes, and communal joy. Mexico and India in a bottle: - Loca Loka, which translates to ‘crazy world’ (derived from Spanish and Sanskrit etymologies), is distilled from 100% pure highland blue agave, a desert plant from the Jalisco region of Mexico. - The idea behind it, Daggubati says, was to bring out a tequila that captures the best of both worlds—the fiery spirit of Mexican festivities and the aromatic spices of Indian cuisine. - In the American market, which is the brand’s current target, Loca Loka is trying to cater to the Indian diaspora, which comprises traditional whiskey drinkers who continue to look at tequila for shots. [Read More]( --------------------------------------------------------------- News & Updates - [Antitrust:]( European Union regulators on Monday said Apple is in breach of sweeping new tech rules because it does not allow customers of its App Store to be steered to alternatives. The European Commission, the EU’s executive arm, also said it had opened a new probe into Apple over new contractual terms with developers. - [AI chips:]( ByteDance Ltd and Broadcom Inc have discussed a potential collaboration on an AI processor to help bolster the TikTok parent’s development of that technology. The US chip designer and Beijing-based ByteDance have talked about a 5-nanometer purpose-built chip. No deal has yet been reached between the two companies. - [Economic crisis:]( Sri Lankan officials and global investors are expected to hold a second round of direct talks this week to agree on the restructuring of $12 billion in defaulted bonds. A group of bondholders, known as the steering committee, went “restricted,” meaning the conversations with the government are covered by temporary trading limitations because the topics under discussion may be market sensitive. Did you know? What is the coldest place in the universe? Answer: The Boomerang Nebula. It has a temperature of one degree Kelvin. We would love to hear from you! To let us know what you liked and disliked about our newsletter, please mail nslfeedback@yourstory.com. If you don’t already get this newsletter in your inbox, [sign up here](. For past editions of the YourStory Buzz, you can check our [Daily Capsule page here](. [Feedback]( [Unsubscribe]( [Newsletters](