Edtech

Byju’s Faces Allegations of Hiding $533 Million in Unusual Hedge Fund Transaction

• ByStartupStory     |    September 13, 2023

Byju’s, the prominent edtech firm, is under scrutiny following allegations that its US subsidiary, Alpha Inc, transferred a substantial $533 million to an unconventional hedge fund called Camshaft Capital Fund. These claims have arisen in a lawsuit brought by some of Byju’s lenders.

Camshaft Capital Fund, established by William C. Morton at a young age, has been accused of housing the funds, despite its leader’s alleged lack of formal investment training. Notably, luxury cars have been registered in Morton’s name since the transfer, including a 2023 Ferrari Roma, a 2020 Lamborghini Huracán EVO, and a 2014 Rolls-Royce Wraith.

What makes this situation even more peculiar is that Camshaft Capital Fund’s listed main business address, 285 NW 42nd Ave, Miami, is the location of an IHOP (pancake shop) in Little Havana. Despite the fund’s claim, the IHOP employee has no knowledge of Morton, Camshaft Capital Fund, or Byju’s business activity in the vicinity.

Interestingly, in an unrelated lawsuit filed by the hedge fund, Camshaft noted its principal place of business is in the Virgin Islands, contradicting its previously stated address.

Glas Trust, the agent for the creditors, contends that Byju’s attempted to conceal the $533 million, potentially impeding creditors. However, Byju’s has refuted these allegations, asserting that the funds were invested in a multi-billion dollar fund with high-security fixed income instruments.

The lenders have argued that the $533 million transferred is collateral for a $1.2 billion loan, and there is a dispute between Byju’s and the lenders regarding the loan status. Byju’s is reportedly negotiating a deal with creditors to repurchase the loan within six months by selling overseas assets to private equity and strategic investors.

Notably, Byju’s, founded in 2015, has attracted substantial investments from tech industry giants and achieved a valuation of over $20 billion. The lenders’ lawsuit aims to trace the money and recover any excess management fees paid to Camshaft.

As of now, Camshaft has not filed a response to the lawsuit. This complex financial dispute continues to evolve, with significant implications for Byju’s and its lenders.

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