Zerodha Gets Final Approval For Asset Management Company; Vishal Jain Appointed CEO Of AMC

All decks have been cleared for invest tech major Zerodha’s foray into the asset management space. The startup has received the final approval from markets regulator SEBI to commence operations of its AMC. 

“We just received the final approval for the  @ZerodhaAMC we are building in partnership with @smallcaseHQ,” said Zerodha cofounder Nithin Kamath on X (formerly Twitter).

The company also announced the appointment of former Nippon India senior executive Vishal Jain as the new CEO of its asset management arm. 

Kamath said the move to start a mutual fund was led by consideration around spurring retail investor participation in Indian markets and to build simple products – mutual funds – that users could understand. 

“Our motivation to start a mutual fund was twofold. The first was that the biggest challenge and opportunity for Indian markets is the shallow participation. Even after all the growth over the last 3 years, we only have maybe 6-8 Cr unique mutual fund and equity investors put together,” tweeted Kamath. 

He also said that mutual funds are a ‘perfect instrument’ to onboard the next 1 Cr investors. The Zerodha CEO said that the company would aim to be ‘index-only’, and will create ‘simple funds’ and ETFs (exchange traded fund) that investors can invest in.

This comes nearly two years after the Bengaluru-based brokerage firm received an in-principle nod from SEBI to undertake its asset management business. However, the final approval comes barely four months after the invest tech unicorn announced a joint venture with smallcase to launch an AMC.

Back then, Kamath said that Zerodha was looking at building low-cost passive mutual fund products for India with smallcase. 

The joint venture (JV) aims to leverage the synergies and resource bases of both companies to make a splash in the nascent homegrown AMC space. The approval also comes close on the heels of conglomerate Reliance Jio signing a JV with BlackRock to foray into the homegrown asset management market with a combined warchest of $300 Mn. 

Founded in 2010 by brothers Nithin and Nikhil Kamath, Zerodha is a profitable bootstrapped startup that allows users to trade in stocks online. Zerodha’s net profit zoomed 87% year-on-year (YoY) to INR 2,094 Cr in FY22. Operating revenue stood at INR 4,963.7 Cr during the year.

The approval comes just a day after Kamath announced that the brokerage’s investment arm Rainmatter would set aside an additional INR 1,000 Cr for Indian founders with no exit mandates. 

Zerodha operates within the larger Indian fintech ecosystem which, as per Inc42, is looking at a $2.1 Tn market opportunity by 2030. Within this, the invest tech market is projected to account for an opportunity of $74 Bn in market size by 2030.