Startups Prep Exits for Chinese Backers on Unyielding Rules

Udaan, Pocket FM, and Vedantu have joined the league of startups looking to offer exits to their Chinese backers as the industry's appeal to ease restrictions on such investments has failed to secure a policy shift, according to four people familiar with the matter.

- Mansi Verma & Priyamvada C.

Udaan and Pocket FM count Tencent among their investors, while Vedantu's Chinese backers include Legend Capital and the TAL Education Group.

There has been a recent spike in discussions around Chinese investors looking to pull out, several Indian investors Mint spoke with confirmed separately.

"We can expect more block deals within listed startup entities as well, as Chinese investors don't want to stay invested given the current geopolitical scenario," said one of the investors. This shift is more visible in highly regulated sectors such as gaming and fintech.

The people and investors quoted earlier spoke with Mint on the condition of anonymity.

In recent months, Antfin and Trip.com have exited or trimmed stakes in firms like Paytm and MakeMyTrip. Last year, Tencent sold its stake in Dream11 parent Sporta Technologies Ltd to Singapore-based Tiga Investment Pte Ltd for $150 million, as the gaming unicorn sought to comply with regulations on Chinese investments.