Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning, folks. 🙏

Today we’re diving into -
- BYJU’s latest $530mn financial trickery,
- Tesla’s $2 billion appetite for Indian electronics,
- And a possible BSE/LSE (London Stock Exchange!) tie-up.

Our read time today is 4 minutes and 36 seconds - faster than Feroz Shah Kotla got changed to Arun Jaitley Stadium. 😭

Let's dive in. 👇

Market Vibe Check

BYJU’s sends $530mn to a pancake shop hedge fund run by a 23 year old. 🤦

TLDR -
- BYJU’s sent $530mn of their loan money to a 3-year old hedge fund run by a 23y/o guy.
- The 23 y/o guy bought a Ferrari 488, Lambo Huracan, and a Rolls Royce right after.
- This is insane, because BYJU’s promised to sell their businesses to pay the loan back. Why would you do that when you can just… withdraw the money? 😉

Probably the craziest story you will hear today - BYJU’s sent $533 million to a Florida-based hedge fund that had it’s headquarters at a pancake shop.

To understand how we got here, let’s start from the beginning.

Last year, BYJU’s wanted to buy an education startup - 2U.

2U is like Netflix, but for online courses - you can binge-watch biochemistry instead of Breaking Bad.

The price tag was coming to $1 billion, so BYJU’s took a loan of $1.2 billion to cover the price of 2U plus any other deal closing costs.

But the transaction fell through.

So instead of returning the money back to investors, BYJU’s decided to use it for their normal business.

They spent over $650mn of it, but the remaining $550mn went MISSING.

This got their investors REALLY angry, because who on Earth misplaces half a billion dollars?

So the investors decided to hunt the money down.

And now, the $550mn has been traced to a Miami-based hedge fund who’s office is registered at an IHOP!

Plus, the portfolio manager of this fund (William Morton) was only 23 when this transfer happened.

And suddenly, 2 months after BYJU’s sent him the money, he had a Ferrari 488, a Lamborghini Huracan, and a 2014 Rolls Royce Ghost registered to his name.

BYJU’s has admitted to investing the loan somewhere - but the stupid thing is this.

They promised yesterday to pay the money back, and were willing to sell their crown jewels to do it.

Why would you literally sell your businesses instead of taking your supposedly “liquid” cash and returning it back?

Golmaal hai bhai, sab golmaal hai!

Tesla on track to source $1.9 billion of components from India. 🔋

TLDR -
- Tesla is gonna be importing almost $2bn of parts/pieces/components from India.
- This basically doubles their last year’s imports.
- Modi govt. is welcoming EV businesses, but EVs are saying “our customers need to be able to get their cars charged”.

This June, Elon Musk had a meeting with Modiji.

After the meeting, Elon said that Tesla was looking to “invest in India as soon as humanly possible”.

Either Elon sees the potential, or Modi is one hell of a salesman, or both - but Tesla just planned to double it’s component sourcing from India.

Last year, Tesla bought over $1 billion of parts/electronics from Indian suppliers, and they have signed orders worth a total of $1.9 billion this year.

But Tesla has had virtually NO presence in India for decades.

The biggest two problems on Elon baba’s head have been infrastructure and regulation.

India simply does not have the charger infrastructure for cars, plus the government puts a 100% tax on imported cars, so a $40,000 Tesla becomes almost $100,000+ when you factor in registration costs, etc.

Attitudes are quickly changing - and the government has set 2030 targets of -
- 30% EV adoption for private cars
- 70% EV adoption for commercial vehicles
- 80% EV adoption for 2/3 wheelers

Very aggressive, very Modi-like.

Electric. ⚡

Indian startups might get to dual-list in the West. 💪

Indian companies have always been banned from dual listing their companies - ie your company cannot trade on the Bombay Stock Exchange AND on the New York Stock Exchange.

But attitudes are changing - Finance Minister Nirmala Sitharaman is exploring dual-listing of Indian businesses on the London Stock Exchange.

Giving local companies the opportunity to attract foreign capital could be a life-saver.

Lots of Indian investors are uncomfortable backing radical new founders, but the coolest and most “generational” businesses have come out of crazy bets taken by Western VCs.

Things are changing - this is gonna help speed it all up. 🏃‍♂️💨

In other news… ☕

Caesar’s Palace leaves Dubai just as gambling gets “legalized” (BBG)

Dubai real estate prices cross the highest ever amount in a decade (BBG)

Paytm tries hopping on the AI boom (Inc42)

Birkenstock (premium chappals company) files for an IPO in the US (BBG)

India gets a very underwhelming 3.5% discount on the iPhone (TC)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai