Groww acquires mutual funds business of Indiabulls Housing Finance

Bengaluru headquartered Nextbillion Technology, which owns and operates investment platform Groww, has announced the acquisition of mutual funds business of Indiabulls Housing Finance, comprising Indiabulls Asset Management Company (IAMCL) and Trustee of IAMCL (ITCL). 

The Rs 175 crore ($23.8 million as per current exchange rates) deal included cash and a cash equivalent component of Rs 100 crore ($13.6 million), as per a statement.  

This is the Tiger Global-backed unicorn’s first acquisition and will make it one of the first to enter the asset management space, the company claimed. 

The transaction, it said, will add mutual fund revenue of Rs 4.16 crore to Groww’s books, based on figures reported for the financial year ended March 31, 2020.  

“Over the last five years, we have made investing simple and transparent for retail investor across the length and breadth of the country. 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,” Lalit Keshre, CEO of Groww, said.  

“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,” he said. 

Groww claims to have over 1.5 crore customers who invest in mutual funds, stocks and exchange traded funds (ETFs) on its platform. It was founded in 2017 by former Flipkart executives Keshre, Harsh Jain, Neeraj Singh and Ishan Bansal, and was valued at over $1 billion in April when it raised $83 million in an equity round led by Tiger Global Management. It competes with other digital broking firms such as Upstox and Zerodha.  

For the listed entity Indiabulls Housing Finance, the divestment of stake in mutual funds business of IAMCL and ITCL will help the entity focus on its core business of real estate asset management through Alternate Investment Fund (AIF) structures.  

“Considering all of the above, the sponsor has decided to focus management bandwidth and consolidate capital towards its core lending business and divest out of the mutual fund business,” a filing made by Indiabulls Housing Finance with the markets regulator 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 AIF, in line with the company’s asset light strategy,” Gagan Banga, vice chairman and managing director of Indiabulls Housing Finance, said in the statement.  

He added, “Indiabulls Housing Finance will continue to build on its pedigree as a leading lender in the market and our AIF-driven Real Estate Asset Management business will complement our core business perfectly.”