Edtech behemoth Byju’s is facing allegations that it concealed a staggering $533 million in an obscure hedge fund that has been in existence for three years, as lenders endeavor to recover the funds. This development has come to light amid an escalating public dispute between Byju’s and the lenders, who assert that the $533 million serves as collateral for a $1.2 billion loan.
According to a Bloomberg report, in the year 2022, the tech giant purportedly funneled over half a billion dollars into the Camshaft Capital Fund, a move contested by certain lenders in a lawsuit.
Camshaft Capital Fund was established by William C. Morton at the tender age of 23. Lenders have questioned Morton’s qualifications and expertise in investment management, as cited by Bloomberg, given the apparent absence of formal training in the field.
Meanwhile, Byju’s has asserted that it is not a party to the legal proceedings in Florida and has not been officially served with copies of the lawsuit. In a statement, Byju’s emphasized its detachment from the ongoing dispute and highlighted a Delaware court ruling from June that rejected the lenders’ request for information regarding the $500 million, a portion of the funds received by BYJU’S Alpha, the borrowing entity under the TLB (Term Loan B).
Furthermore, Byju’s clarified that the Credit Agreement dated November 24, 2021, does not impose any restrictions on the movement or investment of disbursed funds. There is no stipulation for Byju’s to maintain cash as collateral. Byju’s Alpha has strategically invested in fixed income assets akin to other major corporate treasuries.
The court filing seems to have preceded the latest loan repayment proposal, and negotiations between the parties are ongoing in pursuit of a resolution to the dispute.
In response to the allegations, Camshaft has vehemently denied the claims made in the court filing by Glas Trust Company, as conveyed by Camshaft’s attorney, David Massey.
Byju’s, founded in 2015 by Raveendran, has garnered substantial investments from some of the tech industry’s most prominent players, including the Chan Zuckerberg Initiative led by Mark Zuckerberg, Silver Lake Management, and Naspers Ltd. Notably, Byju’s was valued at over $20 billion in the previous year when it contemplated a merger with a special-purpose acquisition company.
