BYJU's, Camshaft & the IHOP connection: An investigation into hidden assets | Business Upturn

BYJU’s, Camshaft & the IHOP connection: An investigation into hidden assets

Byju’s, one of India’s leading tech companies, is alleged to have concealed $533 million in a relatively unknown hedge fund, Camshaft Capital Fund.

Byju’s, one of India’s leading technology companies, has reportedly stashed $533 million in a relatively unknown hedge fund, Camshaft Capital Fund. This fund was started by William C. Morton when he was only 23 years old. According to lenders, the fund raised money despite Morton’s apparent lack of formal investment training. Since the transfer, luxury cars including a 2023 Ferrari Roma, a 2020 Lamborghini Huracan EVO and a 2014 Rolls-Royce Wraith have been registered in Morton’s name.

The allegations are part of an ongoing dispute between Byju and lenders who say the $533 million is collateral for a $1.2 billion loan. Lenders say the loan is in default, while Byju’s accuses lenders of predatory tactics.

Byju’s has proposed to buy back the loan within six months and is in talks to sell some of its overseas assets to private equity and strategic investors to fund the repayment.

Camshaft Capital Fund, despite receiving such a large amount from Byju’s, seems to cater to smaller clients, accepting investments starting at $50,000. Interestingly, in a 2020 SEC filing, Camshaft listed its principal business address as an IHOP restaurant in Miami. An employee at the restaurant claimed to know nothing about Morton, Camshaft Capital Fund or Byju’s.

Unlike the IHOP location, the Camshaft-connected entity listed a luxury oceanfront condo in the Porsche Design Tower in Sunny Isles Beach as its business address. In an unrelated lawsuit filed by Camshaft in Miami in June, the hedge fund said its principal place of business is in the Virgin Islands.

The dispute over the missing funds is central to the creditors’ negotiations. Glas Trust, the agent for the creditors, was able to gain control of the Byju’s unit that issued the debt. However, by that time the funds had already disappeared. According to Byju’s Alpha’s lawyer during a court hearing in May, Byju’s was trying to protect the money from predatory lenders and had the right to transfer the money under the loan agreement.

Byju’s claimed in court that the lenders were trying to take over the entire ed-tech empire led by its founder Byju Raveendran. Byju’s asked a Delaware judge to dismiss the default asserted by Glas.

The company is trying to negotiate an agreement with lenders to restructure the facility, one of the largest unrated term loan B offerings from a start-up company.

Since its founding in 2015, Raveendran has attracted investment from some of the world’s biggest tech investors, including Mark Zuckerberg’s Chan Zuckerberg Initiative, Silver Lake Management and Naspers Ltd. Byju’s was valued at more than $20 billion last year, when it considered a merger with a special-purpose acquisition firm.