Macquarie slashes startup valuation after accusation of inflated assumptions

The news: Macquarie has written down almost its entire investment in Indian startup Byju’s, weeks after Julius Baer accused it of charging fees based on an inflated valuation.

The numbers: Macquarie cut the carrying value of its investment in Byju’s by around 98%, having invested hundreds of millions in the startup in 2021.

The context: According to unnamed sources cited by Bloomberg, Julius Baer's CIO, Yves Bonzon, sent a letter to Macquarie Capital in January, saying the firm was too slow to revalue the stake and provide information after the company became increasingly buffeted by growing losses and scandal. Despite Byju’s plummeting market valuation, Bonzon said Macquarie continued charging clients based on a 2022 funding round that valued Byju’s at $22 billion, even after other investors marked down their valuations by as much as 95%.

What they said: Bonzon’s letter to Macquarie read: “We believe this demonstrates a disincentive for Macquarie to devalue the position, despite the strong market indications that the March 2022 valuation no longer holds, in contravention of your fiduciary duties as a fund manager.”