Now, Qatar wealth fund goes after Byju Raveendran's personal assets

Qatar Investment Authority (QIA), one of the largest external investors in India, also asked the Karnataka High Court to prevent Raveendran from selling, pledging or transferring his assets. In a court filing seen by Mint, the investor sought to claim Raveendran's personal assets up to $235.19 million.

Apart from investing in the company in 2019 and 2022, QIA had also lent around $250 million to Raveendran in March 2022, which the math tutor turned entrepreneur ploughed back into Byju's in its last funding round at a peak valuation of $22 billion.

In its petition, QIA asked the court to “pass an order of injunction restraining Respondent No.1 (Byju Raveendran) including his servants, agents, and assigns from, in any manner dealing/parting with, selling, charging, pledging, transferring, disposing of, alienating, or encumbering, or in any manner creating any right, title or interest in any of their assets,..".

A rare instance

The Qatar fund's action, the latest in a series of measures by investors and debtors against Byju's, is also a rare instance of an investor demanding details of a founder's personal assets. Raveendran's assets are not fully known; however, in his personal capacity, he owns a minority stake in Aakash Education Services, the test prep unit seen as the Byju's group's crown jewel.

"If the party has issued a personal guarantee, then in case of default, lenders can enforce a personal guarantee by initiating legal proceedings. A personal guarantee can be of a continuing type of a specific guarantee", said Jidesh Kumar, managing partner, Kings Stubbs & Kasiva, a law firm.

Also read | Edtech funding crisis sucks in two-decade-old firm and its thousands of students

Also read | Byju’s bankrupt: Is the edtech crisis deepening?

Also read | Byju's startup lesson: Don’t get carried away with winner-takes-all dreams

However, it is not clear from the QIA filing whether Raveendran did offer a personal guarantee. The last known high-profile case where a personal guarantee was invoked by a lender was in the case of Kingfisher Airlines founder Vijay Mallya. Generally, banks demand personal guarantees in clearing large loans.

Qatar Investment Authority has sought relief under Section 9 of the Arbitration and Conciliation Act, 1996. Respondents include Raveendran and his Singapore investment entity Byju’s Investments, which is controlled by Raveendran and his family.

Lent against shares

In 2022, QIA had lent $250 million to Raveendran against his shares in Think & Learn Pvt. Ltd, which he invested in the edtech business at a valuation of $22 billion. At the time, Raveendran had pointed to the steep valuation to claim that Byju’s was not affected by the onset of a funding winter.

This transaction was initially part of an $800 million round announced in March 2022 from equity investors such as Vitruvian Partners, Oxshott Capital Partners and Sumeru Ventures. Investments from Oxshott and Sumeru never materialized. Of the $800 million, Raveendran said he had raised $350 million in his personal capacity to invest in the company. Of this $350 million, $250 million came from QIA and $100 million from IIFL Holdings.

QIA and Raveendran did not respond to requests for comments on Monday.

In October 2022, Byju’s said it had raised $250 million including from QIA, though it did not offer a break-up. Earlier, QIA had led a $150 million investment in Byju's in July 2019.

Stake may prove worthless

QIA's current stake may prove to be worthless, after Byju's attempted to raise a $200 million rights issue in January 2024, at a $25 million pre-money valuation. This would have wiped out any investor that did not participate in the funding round because of the throwaway nature of the valuation of this round. Investors in Byju’s came in at a higher valuation and if they choose not to participate in future rounds at a discounted valuation, then they risk severe dilution in their stakes.

As a result, at least four investors – Sofina, Prosus, Peak XV and General Atlantic – have challenged the legality of the rights issue at the National Company Law Tribunal, and have petitioned the court to also oust the management citing suppression of minority rights and misgovernance by founders.

Separately, Byju’s has been fighting a battle against overseas lenders to settle a $1.2 billion loan first raised in November 2021. Last week, the company entered into insolvency after Indian cricket board BCCI took it to court over ₹150 crore of unpaid dues. Byju’s has appealed the order. Should it lose the appeal, Raveendran will in effect lose control of the running of Think & learn.