NEW DELHI: Renowned billionaire businessman and philanthropist Ratan Tata divests 5% of his shares in the discount brokerage platform Upstox, achieving an impressive 23,000% return on his initial investment made in 2016, based on the last round valuation of $3.5 billion.
This sale has garnered significant attention due to the staggering 23,000% return on investment that Tata has achieved. Ratan Tata’s initial investment in Upstox, made several years ago, was part of his broader strategy to support innovative startups in India’s burgeoning fintech sector.
Upstox, which has since grown to become one of India’s leading online trading platforms, has benefited immensely from Tata’s backing, both financially and in terms of credibility. Based on the last round valuation of ₹293,868,750,0001 from the recent funding round, Tata’s investment in Upstox skyrockets. He initially invests ₹16,792,5002 for 1.33% stake, and now, with the new valuation, his investment soars to approximately ₹3,907,360,450, reflecting a return of over 23,275%.
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“We are particularly honoured that Mr. Tata, a respected and iconic figure in India, has been such a key part of our journey. His early belief in our vision was a huge vote of confidence, and his challenge to us was both simple and profound: “How can we offer the same top-quality wealth advice to the everyday Indian that wealthy individuals receive? This question has been at the heart of everything we do at Upstox.” comments Upstox cofounder Kavitha Subramanian on this significant achievement.
“That vision inspired the creation of Upstox Wealth, a platform designed to give every Indian access to the best financial tools and advice—no matter their background or investment size. We believe that everyone deserves the opportunity to grow their wealth, not just the privileged few. Our mission is to deliver strong returns for all our investors, and we’re proud to say that today we’re able to return part of Tata’s investment.” she added.
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The 23,000% return on Tata’s investment is a testament to the explosive growth of Upstox. From its humble beginnings, the company has expanded its user base exponentially, offering a range of services including stock trading, mutual funds, and digital gold. This growth has been fueled by the increasing adoption of digital financial services in India, particularly among younger, tech-savvy investors.
Upstox is a one-stop shop for a wide variety of financial products, including stocks, IPOs, futures and options, commodities, currencies, fixed deposits, peer-to-peer lending, government bonds, T-bills, non-convertible debentures (NCDs), gold, insurance, and more. In the last fiscal year, Upstox achieved an EBITDA of ₹200 crore and a consolidated net profit of ₹25 crore. The broking revenue for 2022-23 grew significantly by 44%, exceeding ₹1,000 crore. Moreover, Upstox generated over ₹200 crore in cash during the last two quarters of FY23.
The sale of Tata’s stake is expected to have a significant impact on the market. Analysts predict that this move could signal a period of consolidation for Upstox, as it continues to expand its offerings and solidify its position in the competitive fintech landscape. The proceeds from the sale are likely to be reinvested in other promising ventures, continuing Tata’s legacy of nurturing innovation and entrepreneurship.
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Ratan Tata’s investment philosophy has always been characterized by a keen eye for potential and a willingness to support disruptive technologies. His early investments in companies like Ola, Paytm, and now Upstox, have not only yielded substantial financial returns but have also played a crucial role in shaping India’s startup ecosystem.
As Ratan Tata exits his stake in Upstox, the company is poised for further growth and innovation. With a strong foundation and a clear vision for the future, Upstox is well-positioned to continue its trajectory as a leader in the fintech space. Meanwhile, Tata’s next moves in the investment world will undoubtedly be watched closely by industry observers and aspiring entrepreneurs alike.