Qatar Investment Authority asks Karnataka HC to block, reveal Byju Raveendran’s personal assets

The Qatar Investment Authority (QIA) has approached the Karnataka High Court to compel Byju Raveendran, the founder of the embattled tech giant Byju’s, to disclose and block the transfer of his personal assets. This legal move adds to the growing challenges faced by Raveendran, who recently distanced himself from his struggling startup.

QIA, a major foreign investor in India, requested the court to prevent Raveendran from selling, pledging, or transferring his assets. The wealth fund aims to claim up to $235.19 million of Raveendran’s personal assets, according to court documents. QIA had previously invested in Byju’s in 2019 and 2022 and loaned Raveendran approximately $250 million in March 2022. This loan was used to reinvest in Byju’s during its last funding round when the company was valued at $22 billion.

The court filing by QIA seeks an injunction to restrain Raveendran and his associates from dealing with, selling, or transferring any of their assets. This is a rare instance where an investor is demanding details of a founder’s personal assets. While the full extent of Raveendran’s assets is unknown, he holds a minority stake in Aakash Education Services, considered a valuable part of the Byju’s group.

Legal experts have noted that if a personal guarantee was issued, lenders could enforce it through legal proceedings in case of default. However, it remains unclear from QIA’s filing whether Raveendran provided such a guarantee. The last notable case involving the invocation of a personal guarantee by a lender was with Kingfisher Airlines founder Vijay Mallya.

QIA has sought relief under Section 9 of the Arbitration and Conciliation Act, 1996. Respondents in the case include Raveendran and Byju’s Investments, a Singapore-based entity controlled by Raveendran and his family.

In 2022, QIA had lent $250 million to Raveendran against his shares in Think & Learn Pvt. Ltd, which he reinvested in Byju’s at a peak valuation. This transaction was part of an $800 million funding round announced in March 2022, which included equity investors like Vitruvian Partners, Oxshott Capital Partners, and Sumeru Ventures. While investments from Oxshott and Sumeru never materialized, Raveendran raised $350 million in his personal capacity, with $250 million coming from QIA and $100 million from IIFL Holdings.

In October 2022, Byju’s reported raising $250 million, including from QIA, though specifics were not disclosed. Earlier, QIA led a $150 million investment in Byju’s in July 2019.

QIA’s current stake in Byju’s may be at risk due to a proposed $200 million rights issue in January 2024, which significantly lowered the company’s valuation. This move would dilute any non-participating investor’s stake, leading several investors, including Sofina, Prosus, Peak XV, and General Atlantic, to challenge the rights issue’s legality at the National Company Law Tribunal. These investors also sought to remove the current management, citing suppression of minority rights and misgovernance by the founders.

Additionally, Byju’s is embroiled in a dispute with overseas lenders over a $1.2 billion loan first raised in November 2021. The company recently faced insolvency after the Indian cricket board, BCCI took it to court over ₹150 crore in unpaid dues. Byju has appealed the order, and should it fail, Raveendran might lose control over Think & Learn.

This legal action by QIA marks another significant development in the ongoing financial troubles and legal battles surrounding Byju’s and its founder.