Byju’s CEO mortgages his homes to pay salary to 15,000 employees: Report

Byju Raveendran, the man behind the tech giant Byju's, has pledged his residential properties, including those owned by his family, as collateral to secure funds for the salary of its employees, according to a Bloomberg report.

This move has enabled the borrowing of $12 million (around Rs 1.6 billion), which was subsequently utilised to meet payroll obligations for 15,000 employees at Think & Learn Pvt Ltd, Byju's parent company.

Homes pledged

• Citing people aware of the development, Bloomberg said, a couple of houses belonging to the ex-billionaire's family in Bengaluru, along with his under-construction villa in Epsilon, an upscale gated community in the city, were used as security to secure a $12 million loan.
• These funds were subsequently used to pay the salaries of 15,000 employees of the company.

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Financial struggles

• Once valued at nearly $5 billion, Raveendran has faced personal financial setbacks, of late.
• As of now, he has approximately $400 million in personal debt, the report added
• Furthermore, he reinvested $800 million from share sales into the company in recent years, leaving him financially tight.

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Moves amidst legal battles

• Byju's, previously India's most valuable tech startup, is entangled in legal disputes too.
• A lawsuit with creditors over a $1.2 billion term loan and the ongoing sale of its US-based kids' digital reading platform for approximately $400 million are underway.

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Regulatory scrutiny

• Last month, Byju's released its first financial results in years, revealing a marginal reduction in losses at Think & Learn amid a pandemic-induced surge in business.
• Simultaneously, the company faced scrutiny from the Enforcement Directorate (ED) over alleged foreign exchange violations, with show-cause notices issued to Raveendran and Think & Learn Pvt Ltd.

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• Regarding the ED investigation, Byju's responded, saying, "The queries in the notice are solely technical in nature. The Company has filed requisite intimation for all FDI in accordance with the eligibility criteria, not affected by the alleged non-filing of APR."

As Byju's navigates financial intricacies, industry observers anticipate how these strategic moves will impact the edtech giant's future.

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