Groww Acquires Indiabulls’ Mutual Funds Business For INR 175 Cr

SUMMARY

Indiabulls will also leverage Groww’s platform and network of 1.5 Cr customers to expand its mutual fund product

The acquisition is subjected to the approval of market regulator Securities and Exchange Board of India (SEBI)

Groww reported a revenue of INR 76.16 Lakh, representing a 823% YoY growth from revenue of INR 8.25 Lakh in FY19

India’s latest wealth management unicorn Groww, managed by Nextbillion Technology Pvt Ltd, has announced the acquisition of Indiabulls Asset Management Company Limited (IAMCL) and its trustee Indiabulls Trustee Company Limited for INR 175 Cr. The acquisition is subject to the approval of market regulator Securities and Exchange Board of India (SEBI).

Launched in April 2017, Groww offers direct plans for mutual funds and a seamless and transparent approach to investing via a mobile app and web platform. The company was founded by former Flipkart employees Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal. The company competes with Steadview Capital and Tiger Global-backed IndWealth, Accel Partners’ portfolio company Scripbox and bootstrapped unicorn Zerodha.

“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,” said Lalit Keshre, CEO and cofounder of Groww. Indiabulls will also leverage Groww’s platform and network of 1.5 Cr customers to expand its mutual fund product. The distribution platform and the mutual fund business are expected to be run as separate businesses.

In the financial year 2019-2020, Groww reported a revenue of INR 76.16 Lakh, representing a 823% year-on-year (YoY) growth from revenue of INR 8.25 Lakh in FY19. About INR 29 Lakh was earned through operations, while the remaining INR 47.12 Lakh was through other sources like profit from the sale of investments and interest on deposits from banks.

During the same period, the company’s expenses grew by 2,703%, from INR 31.76 lakh in FY19 to INR 8.69 Cr in FY20. Thus, its net loss for FY20 stood at INR 7.93 Cr, a 3,348% increase from a loss of INR 23 lakh (0.23 Cr) in FY19. “As this is the fourth year of operation, due to various operational setups, the company is unable to earn profits,” read the filing.

Groww has raised about $142 Mn to date from marquee investors like Sequoia Capital India, Ribbit Capital, Y Combinator Continuity Fund and others. The company had raised $83 Mn in its Series D funding led by Tiger Global, at a unicorn valuation of $1 Bn.