Byju’s defaults on $40 million loan payment, sues lender; Sequoia India & Southeast Asia is now Peak XV Partners

Also in this letter:
■ Amid EV hype, waiting time goes up for hybrid vehicles
■ VC firm Matrix to focus on AI, EVs
■ Oppo, Realme & OnePlus to be independent entities

Byju’s misses $40 million loan payment; sues term loan lender Redwood

The long-drawn loan saga playing out between Byju’s and its lenders has taken a new twist, with the edtech company saying it has sued lender Redwood and its related entities in the New York Supreme Court for accelerating repayment of the $1.2 billion Term loan B (TLB), calling their demands “high handed”. The edtech missed the quarterly interest payment of $40 million on its $1.2 billion TLB.

Byju’s allegations: Byju’s has taken legal action to “disqualify” lender Redwood, accusing it of employing “predatory tactics” and intentionally increasing its stake in the TLB to gain excessive profits, the company said in a statement.

In response to the loan dispute between the parties, Byju’s has decided to halt any further payments to the TLB lenders.

Also read | Timeline: Byju’s $1.2 billion loan saga

Previous negotiations: ET reported in April that Byju’s lenders demanded a prepayment of up to $200 million (approximately Rs 1,600 crore) and that the company was offering a higher rate of interest to restructure the company’s $1.2 billion (Rs 9,600 crore) TLB.

Last month, Byju’s closed a Rs 2,000-crore round from Davidson Kempner Capital in a structured credit transaction against the cash flows of its IPO-bound test-prep subsidiary Aakash Educational Services. Byju’s was expected at the time to use some of the new capital to refinance parts of its TLB, ET reported on May 13.

Sequoia Capital splits; US, India, China entities to operate independently

From L-R: Peak XV Partners managing directors Rajan Anandan, Shailendra Singh, Mohit Bhatnagar, GV Ravishankar

Global venture fund Sequoia Capital has split itself into three entities, spinning off the China and India units from the US vertical. Sequoia India & Southeast Asia entity has been rebranded to Peak XV Partners and will have $2.5 billion of uninvested capital to deploy.

Driving the news: The company announced the news of its split into three separate entities to its limited partners on Tuesday. With its rebrand and split up, Peak XV will continue to back founders in India and Southeast Asia, from its current funds which include $2.5 billion (INR 20,000 crore) of uninvested capital. The Sequoia China entity has been renamed to HongShan, while the US entity will continue to be called Sequoia Capital

India business: Last year, Sequoia Capital raised $2.85 billion to deploy across startups in India and Southeast Asia, the largest dedicated corpus for the region by a risk investor. Also, it was the first time Sequoia demarcated allocations separately for the two regions. The VC firm has backed dozens of startups in India’s new economy ecosystem including unicorns such as Razorpay, Mamaearth, Ola, Oyo, and Byju’s.

Quote, unquote: “It’s a new beginning for us as Peak XV Partners, but unlike most beginnings, this is an opportunity for us to build on top of the foundation laid over the last 17 years. Our firm will continue to be managed by the present leadership team and will continue to invest from the most recently raised set of funds focused on India and Southeast Asia,” said Shailendra Singh, managing director, Peak XV Partners.

Catch up quick: Sequoia Capital’s India and Southeast Asia entity, for the past year, has seen a spate of alleged corporate governance lapses in its portfolio companies, including BharatPe, Zilingo, GoMechanic.

Also read | Exclusive: Sequoia’s Shailendra Singh on corporate governance, VC accountability, frothy tech valuations and more

Amid EV hype, waiting time goes up for hybrid vehicles

As automobile companies get more and more focused on the quantum of likely investment in EVs, hybrid cars are seeing a massive surge in demand, with some having a waiting period of up to two years.

What’s driving the demand? An acquisition cost lower than EVs, self-charging technology that does not require supporting charging infrastructure, and fuel efficiency in city driving conditions have been driving demand for strong hybrid vehicles, according to Shashank Srivastava, senior executive director at Maruti Suzuki.

The hybrid hype: Between October and May, a total of 48,424 hybrid vehicles were sold. Maruti Suzuki and Toyota Kirloskar began selling the Grand Vitara and Hyryder, respectively, in October. During this period, electric vehicle (EV) sales reached 49,591 units while the sales numbers for the entirety of 2022 stood at approximately 50,000 EVs.

FAME woes for EVs: The government last month slashed the official tally of vehicles sold under the electric vehicle (EV) promotion scheme after an investigation found that nearly every second electric two-wheeler was sold with false localisation claims.

Also read | ETtech Explainer: Why is the government’s FAME-II scheme likely to be scrapped?

Will focus on generative AI, EVs: VC firm Matrix

Managing directors Rajinder Balaraman (left) and Tarun Davda, Matrix Partners

VC firm Matrix Partners India recently closed a $550-million fund. Managing directors Tarun Davda and Rajinder Balaraman told TOI that large portions of the fund will be earmarked for emerging technologies such as generative AI, EVs and semiconductors.

Some key takeaways:

Investments from the fund: “With this fund ($550 million), we will focus more on core tech kind of areas like EVs, semiconductors, Web 3. That’s reflective of the broader market and not a shift in strategy for us. In terms of stage, we continue to stay focused on series-A, which is early stage for us,” said Balaraman.

Also read | EV, AI, semicon favourites for VCs amid sluggish startup funding

AI bets: “We have already taken some early bets in the space and made some three investments so far. From the new fund, what we would like to do is basically start investing in what we call emerging sectors — one of those is generative AI,” said Davda.

Angel tax provisions: “In our case, given that a very large number of our LPs (limited partners) are actually global and the leading country is the US, we actually chose to set up our fund in the US. As a result, we have been less impacted by these current changes in regulations,” Balaram told TOI.

Also read | ET Conversations with OpenAI CEO Sam Altman: Rebooting the future with AI

Tweet of the day

Oppo, OnePlus and Realme to be independent entities as parent BBK looks to restructure

China’s largest smartphone maker BBK, the parent of Oppo, OnePlus and Realme, has restructured its Indian business to make the three brands independent entities, with sales accounted for in their own books, according to industry execs.

Cautionary move: According to industry executives, BBK is cautious about the government’s actions against Chinese companies and is concerned about Oppo Mobile India’s business getting affected by any such action.

As a result, BBK has transferred the sales and distribution operations of OnePlus and Realme to their respective legal entities, OnePlus Technology India and Realme Mobile Telecommunications (India). Oppo Mobiles India – which was handling sales and distribution of the three brands till recently – will continue sales of its namesake brand, the executives said.

Previous actions against Oppo: In its recent regulatory filings to the Registrar of Companies (RoC) in May, Oppo Mobiles India disclosed significant government actions taken against the company, including cash to the tune of Rs 2,082 crore frozen in bank accounts.

It was previously reported that Oppo Mobiles was being investigated by the government for alleged evasion of customs duties amounting to Rs 4,388 crore.

Today’s ETtech Top 5 newsletter was curated by Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi