The ED (Enforcement Directorate), a financial crime-fighting organisation, announced on Saturday that it searched three of the Bengaluru locations of the edtech startup Byju to look into potential contraventions of Indian legislation against money laundering.
The FEMA (Foreign Exchange Management Act), the anti-money laundering statute, was the basis for the search, according to the ED, which claimed to have confiscated a number of “incriminating documents and digital data” during the operation.
The agency said that “various complaints received from different private persons” were the reason it began the inquiry into Byju’s. The persons who made the allegations were not named.
Additionally, it stated that Byju Raveendran, the company’s founder and CEO, received “several summonses” during the course of the investigation.
According to the ED, FEMA searches showed that Byju’s received around Rs 28,000 crore in foreign direct investment from 2011 to 2023 and transferred Rs 9,754 crore to a number of foreign jurisdictions as foreign direct investment.
According to the agency, Byju’s hasn’t created financial statements nor had their accounts audited since the fiscal year 2020–21. According to a representative for Byju’s legal team, the searches were part of a “routine inquiry” as defined by FEMA.
The ED inquiry exacerbates issues for Byju’s, which has been under peer pressure to reduce expenses, pay back debts, and submit its yearly financial statements to authorities during the previous few months.
In the last several years, Byju’s has raised quite a few billions of dollars. During the Covid-19 epidemic, in which it forced colleges and schools to cancel physical lessons and encouraged students to enrol in online learning programmes, its use increased dramatically.
Investors in the firm include Lightspeed Venture Partners, General Atlantic, Qatar Investment Authority, Tiger Global, Owl Ventures, Sofina, BlackRock, Tencent, Verlinvest, and T.Rowe.
The business allegedly received $700 million earlier this month in a financing transaction that was spearheaded by two sovereign wealth funds with roots in West Asia and sizable private equity companies. A few previous investors joined the round as well.
According to reports, the firm is in discussions with Abu Dhabi’s fund 10X AD for an investment in either its offline tutoring subsidiary, Aakash Education Services, or its parent company, Think and Learn Pvt. Ltd.
The firm has been focusing on making payments on a sizable $1.2-bn term loan that it obtained in November 2021, thus the fundraising will give it a break.
BlackRock and T Rowe Price, as a minimum two of its investors, have reduced its valuation. The largest asset manager in the world, BlackRock, recently estimated the value of Byju’s to be approximately $11 billion, while T Rowe reduced its estimate to below $10 bn.