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