India's Byju's seeks to raise $1 billion to stave off investor revolt, Bloomberg reports

June 27 (Reuters) - Indian edtech startup Byjus is in advanced talks with potential new shareholders to raise $1 billion in funding as it attempts to sidestep a revolt by some investors, Bloomberg News reported on Tuesday, citing sources familiar with the matter.

Once counted among Indias most successful startups, Byjus is caught in what many see as a governance crisis after it lost board members representing three global investors - Peak XV, Prosus NV, and the Chan-Zuckerberg Initiative - and auditor Deloitte last week.

While the board members did not give a reason for stepping down, Deloitte said it was severing ties with Byjus over delays in disclosing some financial statements. The company was also raided over suspected violations of foreign exchange laws.

Bloomberg News said on Tuesday Byjus is offering benefits like preferential treatment in the case of liquidation to the potential investors, adding that none of its existing shareholders have that option.

Reuters could not immediately verify if existing shareholders in Byjus have that option.

It was not clear if founder Byju Raveendran will ultimately secure a capital influx, the sources, who asked not to be named as the information isnt public, told Bloomberg News.

Byjus did not immediately respond to a Reuters request for a comment.

A part of the fund to be raised will likely be used by the company to pay down a disputed $1.2 billion term loan, the report added. Byjus and its lenders are involved in legal cases in the United States over the restructuring of the loan.

The startup, valued at $22 billion last year, has asked investors to reconsider quitting its board, three sources with direct knowledge of the situation told Reuters last Friday.

Byjus Founder and chief executive Byju Raveendran plans to reconstitute the companys board only after completion of the fundraise as new investors may possibly occupy some of the vacancies, Bloomberg said in its report.