Fintech firm Groww enters Rs 32-trillion MF space with Indiabulls purchase

Groww, a fast-growing technology-oriented investment platform, has signed an agreement with Indiabulls Housing Finance (IBHFL) to acquire Indiabulls Asset Management Company and Trustee Company for consideration of Rs 175 crore (including cash and cash equivalents of Rs 100 crore).

With this acquisition, Groww will become one of the first fintech companies to enter the Rs 32-trillion asset management space.

Groww has more than 15 million customers and offers services like mutual fund and stock market investing. The transaction is subject to market regulator Securities and Exchange Board of India (Sebi) and other regulatory approvals.

In a release, Groww said Sebi’s recent change in sponsorship criteria for fintech companies has enabled it to enter into the asset management space.

Indiabulls MF managed assets worth Rs 664 crore for the quarter ended March 2021.

In December, Sebi had changed the eligibility criteria for sponsoring mutual funds by allowing entities that didn’t fulfill the profitability criteria to set up a mutual fund provided they had a networth of Rs 100 crore.

Lalit Keshre, CEO, and co-founder of Groww, said, “The regulators have also been forthcoming in enabling new-age fintech startups to enter this space and increase the reach of mutual funds to the next 100 million retail investors in the country.”

Groww commenced its financial services business in May 2016 and currently is one of the fastest-growing tech platforms for investing in stocks and mutual funds. Groww is headquartered in Bangalore and backed by marquee investors including Tiger Global, Sequoia Capital India, Y Combinator and Ribbit Capital.

According to the Keshre, the differentiating factor of Groww compared to other fund houses would be leveraging technology, enhancing customer experience, bringing in a lot more transparency, and reducing cost for the end customer.

The sale of Indiabulls MF will be limited only to the mutual fund part of the business, while the Alternate Investment Fund (AIF) and Portfolio Management Service (PMS) businesses will be demerged from the existing IBAMC structure, and remain under Indiabulls Housing Finance, subject to regulatory approvals.

Gagan Banga, Vice Chairman & MD – Indiabulls Housing Finance, “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.”