Summary:
Byju's was once the most valuable startup in India, with major upside potential.
$1.2 billion debt deal was intended for global expansion but led to a corporate collapse.
Debt holders discovered funds missing after being moved out of reach through a hedge fund.
Legal battles reveal attempts to obstruct testimony with a $500,000 offer.
The case serves as a lesson on the risks of lending in a volatile financial environment.
The Rise and Fall of Byju's
On Wall Street, Byju's was an easy sell—hailed as the most valuable startup in India’s history. This tech company, boasting Silicon Valley cachet, a charismatic founder, and ambitious plans to dominate the online-education market, seemed destined for success in the post-pandemic world.
A Record-Breaking Debt Deal
In late 2021, Think & Learn Pvt, widely known as Byju's, was eager to borrow hundreds of millions of dollars from the US market, capitalizing on the low-interest rates set by central banks. JPMorgan Chase & Co. and Morgan Stanley orchestrated a debt deal that saw orders exceeding expectations—more than doubling the initial amount to $1.2 billion. This influx of cash was intended for global expansion, positioning Byju's as India's next hot stock.
Corporate Collapse and Legal Battles
However, instead of soaring, Byju's faced a corporate collapse, leading to a complex court battle. Debt holders seeking to recover over $500 million from Byju's US accounts found their efforts thwarted, as funds were moved out of reach through a Miami hedge fund. The situation escalated when a judge indicated he might alert criminal authorities after allegations emerged that Byju's founder attempted to dissuade a witness from testifying by offering a $500,000 salary in Dubai.
Lessons and Implications
This case highlights the risks of lending in a volatile financial landscape where money can easily cross borders. The rapid decline of Byju's is a sobering reminder in the context of India's startup boom and its appeal to global investors. Michael Kugelman, director at the South Asia Institute of the Wilson Center, remarked, “Byju’s exploded onto the scene as an upstart with major upside potential. The company’s rapid descent is stunning and sobering.”
The Silence of Byju's
Despite the unfolding drama, Byju's and founder Byju Raveendran have not responded to requests for comments regarding the allegations from creditors. Court documents and testimonies from Raveendran and his associates deny any wrongdoing.
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