ETtechMumbai: Online investment platform Groww, backed by funds such as Sequoia Capital and Tiger Global, has signed an agreement with Indiabulls Housing Finance to acquire its asset management company for Rs 175 crore, paving the way for the Bengaluru-based fintech startup to enter the mutual fund business.
The sale of Indiabulls Mutual Fund will be limited to its mutual fund business while its other verticals—such as the Alternate Investment Fund (AIF) and Portfolio Management Services (PMS)—will be demerged and continue under Indiabulls Housing Finance, the two firms said on Tuesday.
The Groww-Indiabulls Mutual Fund deal will now be subject to approvals of capital markets regulator Securities and Exchange Board of India (SEBI) as well as other regulators.
The development comes on the back of recent changes by SEBI in sponsorship criteria for fintech companies to enter mutual fund manufacturing and management space. Several other fintech startups, notably Zerodha which is India’s largest retail brokerage, have also applied for an AMC licence.
If the acquisition is approved by the regulators, Groww will become one of the first fintech startups to be a licensed AMC. This would allow it to manage its own mutual funds.
“We have experienced the power of technology in enabling the access of financial services to even those who do not live in metros or who are not HNIs (high networth individuals),” Lalit Keshre, co-founder chief executive officer at Groww, said in a statement. “With the capability to create products, we plan to make mutual funds even more accessible—by making them simpler, more transparent, and by lowering the cost further.”
Groww recently raised $83 million in a funding round led by Tiger Global, pegging its valuation at $1 billion, ET reported April 8. The company is one of the fastest growing investment platforms with over 10 million registered customers.
Meanwhile, Gagan Banga, the managing director of Indiabulls Housing Finance, said that the decision to exit the mutual funds business will retrain focus on the real estate business.
“We have made the decision to divest our interest in the retail mutual fund business to be able to consolidate capital and provide greater focus in building the company’s real estate asset management business by way of Alternate Investment Fund, in line with the company’s asset light strategy,” said Banga.
The sale of Indiabulls Mutual Fund will be limited to its mutual fund business while its other verticals—such as the Alternate Investment Fund (AIF) and Portfolio Management Services (PMS)—will be demerged and continue under Indiabulls Housing Finance, the two firms said on Tuesday.
Elevate Your Tech Prowess with High-Value Skill Courses
| Offering College | Course | Website |
|---|
The development comes on the back of recent changes by SEBI in sponsorship criteria for fintech companies to enter mutual fund manufacturing and management space. Several other fintech startups, notably Zerodha which is India’s largest retail brokerage, have also applied for an AMC licence.
If the acquisition is approved by the regulators, Groww will become one of the first fintech startups to be a licensed AMC. This would allow it to manage its own mutual funds.
“We have experienced the power of technology in enabling the access of financial services to even those who do not live in metros or who are not HNIs (high networth individuals),” Lalit Keshre, co-founder chief executive officer at Groww, said in a statement. “With the capability to create products, we plan to make mutual funds even more accessible—by making them simpler, more transparent, and by lowering the cost further.”
Discover the stories of your interest
Groww recently raised $83 million in a funding round led by Tiger Global, pegging its valuation at $1 billion, ET reported April 8. The company is one of the fastest growing investment platforms with over 10 million registered customers.
Meanwhile, Gagan Banga, the managing director of Indiabulls Housing Finance, said that the decision to exit the mutual funds business will retrain focus on the real estate business.
“We have made the decision to divest our interest in the retail mutual fund business to be able to consolidate capital and provide greater focus in building the company’s real estate asset management business by way of Alternate Investment Fund, in line with the company’s asset light strategy,” said Banga.
Get Unlimited Access to The Economic Times
