Discover the shocking allegations shaking up the world of education technology! Dive into the scandalous accusations against Byju’s, involving millions of dollars diverted to an obscure hedge fund. Uncover the truth behind luxury cars, legal battles, and the clash between investors and a tech behemoth.
Allegations of Fund Diversion
Investors in Byju’s have raised alarming allegations against the education technology giant, claiming that it diverted a massive $533 million to an obscure hedge fund based in the United States. Four shareholders approached the National Company Law Tribunal (NCLT), seeking to halt a $200 million rights issue, which they denounced as illegal and in violation of established laws.
During the proceedings before the Bengaluru bench of the NCLT, investors urged a stay on the rights issue, arguing that it could only proceed through a legitimate increase in the company’s authorized share capital—a step that had not been taken. Sources disclosed that investors contended Byju’s move to initiate the rights issue was unlawful and contrary to regulations.
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Fund Transfer Allegations
In their plea, investors stated that in 2022, Byju’s transferred $533 million to Camshaft Capital Fund, founded by a 23-year-old whose principal place of business was once a pancake restaurant in Miami. The founder, allegedly lacking formal investment training, owned luxury cars, including a 2023 Ferrari Roma, a 2020 Lamborghini Huracn EVO, and a 2014 Rolls-Royce Wraith. Byju’s refrained from directly addressing the accusations during the NCLT proceedings, previously defending its actions, claiming the funds remained invested in secure instruments through an offshore subsidiary.
Besides the NCLT’s reserved order, the Enforcement Directorate (ED) reportedly initiated an investigation, heightening the legal and regulatory challenges facing Byju’s. The company’s management contends that investors’ actions are obstructing legitimate business operations, highlighting broader tensions between the two sides.
Disputed Board Meeting and Rights Issue
Investors disputed the validity of the board meeting on January 27, which approved the rights issue, alleging it was scheduled as an investor update call. They argued the rights offer was rolled out without sufficient financial information. They also contested the $200 million valuation of the company in the rights issue, significantly lower than its once-commanded $22 billion valuation.
Byju’s lawyers argued that investors were forum shopping, as the Karnataka High Court had instructed them not to implement any resolution passed in the February 23 EGM. Instead of appealing against the court order, investors approached the tribunal. Byju’s claimed the investors’ representatives were present at the meeting deciding on the rights issue and cannot claim a lack of consultation. They emphasized that stalling the rights issue would not benefit anyone, and funds would only be utilized after complying with legal procedures.
Investors’ lawyers countered, stating that Byju seeks more investment from them, with their stake diminishing significantly if they don’t subscribe to the rights issue. They accused Byju of prioritizing value maximization over the interests of 100 million students and 12,000 employees, highlighting a conflict of interests between the company and its investors.
Bhaarat Bulletin’s Shikha Rai, Bimal Dev, and Press Trust of India (PTI) have contributed to the above report
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