Groww to buy Indiabulls AMC's mutual funds business for Rs 175Cr

Online investment platform Groww on Tuesday said it will buy Indiabulls AMC's mutual funds business from Indiabulls Housing Finance in a cash and cash equivalent deal valued at Rs 175 crore — a move that will help the Bengaluru-based startup break into the asset management space.

With more than 1.5 crore users that use Groww's platform to invest in a host of financial instruments including stocks, exchange-traded funds and mutual funds, the acquisition of Indiabulls AMC's mutual funds business will help bolster the startup's presence in the online investing space, as well as enable it to cater to an array of investors — from retail to high net worth individuals.

"We have experienced the power of technology in enabling the access of financial services to even those who do not live in metros or who are not HNIs. 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," CEO and Co-founder of Groww, Lalit Keshre, said.

"We continue to remain focused on democratising investing in India," he added.

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Platforms such as Groww, Zerodha, Paytm Money, and Upstox have seen a windfall in the number of transactions on their platforms in recent times as more and more first-time investors flocked to invest their wealth in financial instruments, amidst the pandemic. Over the last year, these platforms have widened their offerings — from mutual funds and stocks, to ETFs, derivatives, and IPOs, because of the traction they saw for their initial products.

On the regulatory front, a relaxation in norms has helped these companies attain new heights. The Securities and Exchange Board of India, in December, waived compulsory requirements such as five years of experience in the financial services business, three years of profitability, and a net worth of Rs 50 crore for new entrants in the mutual fund business, paving way for more fintechs to enter the space.

As part of the deal, Indiabulls Housing Finance will retain the alternative investment fund and portfolio management service businesses after they are demerged from the Indiabulls Asset Management Company, the two companies said in a press release.

The divestiture of the mutual funds business will help Indiabulls consolidate its capital and focus on growing its real estate asset management business, Gagan Banga, the company's vice chairman and managing director said.

"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," he added.