Lenders Allege Byju’s Hid $533 Million In Miami IHOP-Linked Hedge Fund: Report

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Byju's in November 2021 raised $1.2 billion in debt through a term loan facility (TLB) from a group of overseas investors. (Representational image: Reuters)

Byju’s in November 2021 raised $1.2 billion in debt through a term loan facility (TLB) from a group of overseas investors. (Representational image: Reuters)

Since the transfer of $533 million by Byju’s, hedge fund’s founder got luxury cars registered in his name, including Ferrari, Lamborghini and Rolls-Royce, says a report citing court papers

Edtech major Byju’s allegedly hid $533 million in a three-year-old hedge fund, Camshaft Capital Fund, that once said its principal place of business was an IHOP pancake restaurant in Miami, according to a Bloomberg report quoting lenders trying to recover the cash.

Last year, Byju’s transferred the amount to Camshaft Capital Fund, the investment firm founded by William C Morton when he was just 23 years old, according to the Bloomberg report that quoted some Byju’s lenders claiming this in a lawsuit. It said Morton received the fund even when he did not have any formal training in investing apparently.

Since the transfer of $533 million, Morton got luxury cars registered in his name, including a 2023 Ferrari Roma, a 2020 Lamborghini Huracán EVO, and a 2014 Rolls-Royce Wraith, said the report citing court papers.

According to the Miami-Dade County court filings, the creditors argued, “Byju’s has gone to great lengths to conceal the whereabouts of borrower’s $533 million for the admitted purpose of hindering and delaying.”

The allegations are the latest in the tussle between Byju’s and its lenders over a $1.2 billion loan repayment issue.

According to a recent PTI report, Byju’s is looking to sell its overseas ventures Epic and Great Learning to pay back its entire $1.2 billion (Rs 9,956 crore) loan to lenders.

The ed-tech decacorn has been in discussions with the lenders and has made a proposal to clear its Term B loan, it said.

Byju’s hopes to garner between USD 800 million to USD 1 billion from the sale of Epic, the US-based kids learning firm, and Great Learning – the upskilling platform.

The firm is also working on raising fresh capital from equity sales, and is working with bankers for the sale of the aforementioned key assets to strategic investors — which has also garnered interest.

India’s most-valued startup is hoping to repay the entire USD 1.2 billion term loan B (TLB) in under six months. Of this, it is proposing to repay USD 300 million in the next three months.

Byju’s in November 2021 raised USD 1.2 billion in debt through a term loan facility (TLB) from a group of overseas investors. A TLB is a type of senior secured syndicated credit facility that is issued by global institutional investors. Typically, the proceeds from a TLB are used to either refinance an existing debt or to make overseas acquisitions in order to enhance a company’s offerings.

Byju’s had acquired Aakash USD 950 million in 2021.

In July this year, the steering committee of ad hoc term loan lenders is reported to have agreed to amend the USD 1.2 billion term loan.

The development comes after the company formed an advisory council with ex-Infosys CFO Mohandas Pai and Bharatpe Chairman and former SBI chief Rajnish Kumar after the exit of investors G V Ravishankar of Sequoia Capital (now Peak XV Partners), Vivian Wu of Chan Zuckerberg Initiative and Russell Dreisenstock of Prosus.

Byjus had acquired Epic in a USD 500 million cash-and-stock deal in May 2022.

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