Desh Wapsi: Groww Moves Back Domicile To India

Fintech unicorn Groww has completed its reverse flip, shifting its domicile to India from the US. The startup’s CEO and cofounder Lalit Keshre took to X to make the announcement. 

“As of March 2024, Groww has completed its domicile transition back to India…,” Keshre said in a post on the social media platform.

As part of the shift, Groww merged its US-based holding company, Groww Inc, with its Indian parent entity, Billionbrains Garage Ventures. The startup received the National Company Law Tribunal’s (NCLT) approval for the merger in April last year. 

With this, Groww’s only registered entity is now Billionbrains Garage, which is headquartered in Bengaluru. 

Explaining the rationale behind the move, sources at the startup told Inc42 that it established the holding entity in the US as it was easier to raise capital that way.

“At that time, it was easier to access capital in the US as the startup boom was yet to happen in India. However, over the past three years, we have managed to maintain a healthy financial condition and there hasn’t been any need to raise any fresh funds. Hence, the entity wasn’t serving us any purpose,” one of the sources said. 

Founded in 2017 by Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal, Groww enables users to invest in stocks, exchange-traded funds (ETFs), and IPOs. 

The investment tech startup entered the unicorn club in 2021 after raising $83 Mn in its Series D funding round led by Tiger Global. It has raised a total funding of $393 Mn till date and counts the likes of Peak XV Partners and Ribbit Capital among its backers. 

Billionbrains Garage posted a net profit of INR 448.7 Cr in FY23 as against a net loss of INR 239 Cr in the previous fiscal year. Operating revenue more than tripled to INR 1,277.8 Cr during the year under review from INR 351 Cr in FY22. 

With its return to India, Groww has become the second major startup after PhonePe to shift domicile to India. A number of other Indian startups, including Zepto, RazorPay, and Pine Labs, are also looking to reverse flip.

However, the return to India comes with a heavy cost. For instance, fintech unicorn PhonePe’s investors had to pay a whopping INR 8,000 Cr to shift its domicile to India from Singapore. Earlier, PhonePe CEO Sameer Nigam said that paying such a huge amount in taxes is a “stiff shock” if a business is not at its maturity.

However, the government has maintained a staunch stance that startups reverse flipping will have to bear tax liabilities. Earlier this year, union commerce minister Piyush Goyal said it would be difficult to “justify” exempting certain companies from paying taxes solely for moving back to India.

“These companies went outside for their own selfishness…not because of any pressure or other reason. They wanted to do better tax planning…they enjoyed that benefit. Why they want to come back is not an altruistic motive. They want to list in India because here’s where you get the valuations. India’s growth story is unparalleled in the world and that’s why they want to come here,” Goyal said.

The sources mentioned above said that Groww is yet to compute the taxes it would be required to pay due to it shifting its domicile to India. However, they expect the number to be much lower than PhonePe’s INR 8,000 Cr.

Besides working on relocating to India, Groww has been working to expand its offerings. Earlier this month, it launched India’s first Nifty Non-Cyclical Consumer Index Fund. The scheme will be open for subscription till May 16. 

Last month, it also received an in-principle approval from the Reserve Bank of India (RBI) for the payment aggregator application of its bill payments platform Groww Pay Services. 

With this, Groww has become the second major startup after PhonePe to shift domicile to India. A number of other Indian startups, including Zepto, RazorPay, and Pine Labs, are also looking to reverse flip.