Zerodha’s AMC Arm In Talks With Investors To Raise Up To $100 Mn

Zerodha’s asset management company (AMC), Zerodha Fund House, is reportedly in talks with several investors to raise up to $100 Mn.

“They are in preliminary discussions with several investors to raise up to $100 million for the AMC business,” a source told Entrackr. As per the report, the deliberations are still in the preliminary stages and may still take months to finalise.

If the transaction goes through, this will be the first time that a company under the Zerodha Group umbrella will seek external funding. Brothers Nithin and Nikhil Kamath who operate the stock broking giant have never raised external funding and have been bootstrapped since Zerodha’s inception in 2010.

However, Zerodha Fund House, in a statement, told Inc42 that it is currently not engaged in any conversations to raise external funding.

The report comes at a time when Zerodha has rapidly ramped up its mutual fund play as competition appears on the prowl. 

In October last year, Zerodha’s AMC arm launched its maiden three mutual fund schemes. This came right after the invest tech major received final approval from SEBI to commence the operations of its asset management company (AMC) in August 2023. 

It is pertinent to note that Zerodha Fund House is a joint venture (JV) between Zerodha and another invest tech platform smallcase. Together, the two have previously said that the fund house will look to be a passive-only AMC that builds transparent and affordable mutual fund offerings. 

“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,” Zerodha cofounder and CEO Nithin Kamath  had said in August last year.

The move to raise external capital also comes amid growing competition from peer Groww and the entry of Reliance-backed Jio BlackRock in the Indian asset management market which has earmarked a $300 Mn warchest to garner a big pie of the space. 

Meanwhile, Groww too has launched a mutual fund scheme last month and has been adding lakhs of new systematic investment plans (SIPs) each month as a distributors of such products. 

In February, Kunal Shah-led CRED also acquired investech platform Kuvera to enter the fast-growing wealth management space, taking on the likes of Zerodha and Groww. 

Update: The story has been edited to add Zerodha Fund House’s response.