IPO-bound Groww’s mutual fund assets reach Rs 2,000 crore in May

Groww’s mutual fund business’ assets under management (AUM) have risen 2.5 times in a year to almost Rs 1,940 crore in May, data disclosed by the Bengaluru-based company shows.

AUM was around Rs 789 crore in May 2024. Groww Asset Management Company manages Groww Mutual Fund, a direct fund with multiple offerings.

Groww in May filed confidentially for an initial public offering (IPO) with the markets regulator Sebi in May.

The company, the largest broker in the country by active investors, also raised $200 million from Iconiq Capital and GIC at a $7 billion valuation.

Groww Nifty Index and Groww Liquid funds are among the most popular of the company’s fund offerings. The wealthtech company also acts as a distributor for third-party mutual funds.

In May 2023, when Groww completed the acquisition of the mutual fund business of Indiabulls Asset Management Company Ltd (IAMCL), its AUM was Rs 342 crore, translating to a six times growth in the past two years.

After acquisition of IAMCL, which was incorporated in April 2008, it was renamed Groww AMC.

Zerodha AMC touched Rs 6,400 crore in May. However, around Rs 4,700 crore of that came from Liquidcase ETFs (equity-traded funds), which is a daily traded fund. Groww does not have a similar product as of yet.

While Groww has a larger portfolio of growth and equity-oriented index fund schemes, more than 80 percent of Zerodha’s assets were in ETFs. Zerodha AMC got its approval in August 2023.

“This largely mirrors the customer base of the companies where Zerodha has deep-pocketed traders and investors, Groww is focused on educating and bringing more savers into the equity investment space,” said an analyst with an investment banking firm on condition of anonymity.

Groww reported a three-fold year-on-year growth in profit at Rs 1,819 crore in FY 25. The company’s revenue grew 31 percent to Rs 4,056 crore.

The relatively high growth came amid multiple headwinds, as broking firms brace for higher taxes on trading during the current fiscal. They have been earning lower exchange rebates since the middle of the past fiscal and are also facing more stringent retail F&O trading norms.

Groww’s core strength is that it started as a platform that focused on attracting new customers with long-term investment products, mutual funds, especially systematic investment plans (SIPs), and then moved on to direct equity investment on its broking platform.

The company’s customer acquisition and marketing strategy is anchored on this premise. Analysts expect that a wider range of options will likely help Groww remain relatively steady even in a choppy market.

To broaden customer base and revenue, Groww has agreed to acquire wealth management startup Fisdom in a $150 million all-cash deal, further helping it to diversify its product portfolio within the wealthtech domain.