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Xiaomi Sells Its Stake in Indian Startups

Xiaomi to sell its stakes in Indian companies and exit the country's startup ecosystem.

Xiaomi Sells Its Stake in Indian Startups

What happened: Xiaomi admitted that the ongoing investigations in India could take a long time to resolve, negatively impacting its operating results and cash flows.

  • The Enforcement Directorate (ED), on April 30, announced that it has seized more than Rs 5,500 crore worth of Xiaomi India’s assets.

Why it matters: In 2018, Xiaomi announced a $1 billion investment in Indian startups.

  • Following that, They made investments and built a strong portfolio of Indian companies such as ShareChat, KreditBee, and ZestMoney, among others.

  • They have so far exited Krazy Bee only, with a 12x return on its investments in 2020, by selling its stake through a secondary share sale for $24.8 Mn.

The Rationale: The plan was to compete with Google, which had over 90% market share in the Android Play Store and was being chastised by app developers, OEMs, and others for in-app purchases and other alleged anti-competitive practices.

  • Xiaomi would have found an ideal opportunity to launch a parallel app store in India, similar to Xiaomi Market in China.

  • However, as geopolitical tensions between China and India grew, China internet giants' investments and focus on India appeared to slow, as was the case with Xiaomi.

Conclusion: While nothing secure has materialized yet, judging by current trends, it is expected that Xiaomi will be selling its stakes in Indian Startups.

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