D.E. Shaw claims $71m from Chinese school for failing to sell shares

Hedge fund giant D.E. Shaw & Co. is demanding more than $71 million from a Chinese school operator it invested in that failed to sell shares to the public as promised, according to a recent lawsuit.

New York-based D.E. Shaw, which manages more than $55 billion, said it spent $20 million in 2013 to acquire preferred shares in Ledudu Education, a private company that operates schools and kindergartens in China. The shares could be redeemed with an 18% annualized return if Ledudu didn’t complete an initial public offering by Sept. 1, 2015, D.E. Shaw said in the lawsuit filed Jan. 12 in the Cayman Islands.

The claim offers a rare glimpse into a private market deal gone wrong at one of the world’s most profitable hedge funds. Closely held D.E. Shaw, which last year raised capital for a debut onshore China fund, had made several investments in Chinese education, including a bet on RYB Education Inc., whose shares tumbled in 2020, according to exchange filings.

A spokesman for D.E. Shaw declined to comment. Calls and emails to Ledudu Education’s offices went unanswered.

Headquartered in Beijing, Ledudu Education has provided pre-school education to more than 100,000 Chinese households over its almost two-decade history, the company said on its website.

D.E. Shaw said it sent a redemption notice in September. When no payment was made, D.E. Shaw filed the suit against Grand State Investments Ltd., a Cayman Islands holding vehicle for Ledudu Education shares, and which D.E. Shaw now wants put into liquidation.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.