Investors accuse Byju's of siphoning $533 million. Here are the details

Edtech company, Byju's, is facing allegations from investors who claim that the company siphoned off a staggering $533 million to an obscure hedge fund in the United States.

According to a PTI report, the investors are now seeking a stay on a USD 200 million rights issue, deeming it illegal and against the law.

Four shareholders presented their case before the Bengaluru-bench of the National Company Law Tribunal (NCLT), accusing the company of mismanagement and eroding the company's value through questionable actions.

The NCLT has requested Byju's to provide a written response to the investors' allegations within three days, keeping the order reserved.

The rights issue, intended to infuse funds into the startup, is scheduled to conclude on Wednesday.

While Byju's did not directly respond to the accusations during the proceedings, sources close to the firm hinted that without a stay from NCLT, the rights issue would proceed as planned.

Investors, however, argue that the rights issue can only proceed if there is an increase in the authorised share capital, a process requiring approval through an extraordinary general meeting.

The investors contend that the company's call for a rights issue is both illegal and contrary to the law.

They are seeking a stay on the issue, asserting that the necessary steps for such a move, including an increase in authorised share capital through a shareholder vote, have not taken place.

Byju's management, on the other hand, claims that the investors are obstructing the company's proceedings.

The crux of the investors' accusation lies in the claim that in 2022, Byju's transferred a massive USD 533 million to Camshaft Capital Fund, founded by a 23-year-old individual.

The founder, lacking formal training in investing, reportedly registered luxury cars, including a 2023 Ferrari Roma, a 2020 Lamborghini Huracán EVO, and a 2014 Rolls-Royce Wraith, in his name after the fund transfer occurred.

Byju's, when previously confronted with similar allegations in September last year, had stated that an offshore subsidiary remains the beneficiary of the invested money in high-security fixed income instruments.

The investors argue that the promoters are urging additional investments while significant funds have been allegedly siphoned off.

They express concerns about irreversible consequences if the diverted funds remain abroad.

Meanwhile, the Enforcement Directorate (ED) is conducting an investigation into the reported diversion of funds.

(With inputs from PTI)