Deal marks the entry of India's first fintech firm into the asset management industry
Groww, an online investment site, revealed on Tuesday that it would acquire Indiabulls Mutual Fund for a total of Rs 175 crore.
According to an official statement, the digital platform will purchase Indiabulls Asset Management Company (IBAMC) and the trustee company for Rs 175 crore, which includes cash and the equivalent portion of Rs 100 crore. The deal is subject to regulatory approvals. The Alternative Investment Fund (AIF) and Portfolio Management Service (PMS) businesses will be separated from the current IBAMC structure and will continue to be managed by Indiabulls Housing Finance, according to the statement.
Groww becomes the first fintech to join the asset management space, months after capital markets regulator Sebi permitted digital platforms like fintechs to enter the mutual fund industry. The Quarterly Average Assets Under Management of Indiabulls Mutual Fund was Rs 663.68 crore in March 2021, down from Rs 921.33 crore in December 2021.
Selling the MF will help the parent Indiabulls Housing Finance's capital position. Groww has over 1.5 crore customers who use the platform to invest in mutual funds, stocks, and exchange-traded funds (ETFs) and wishes to increase the retail participation in equity, the statement 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," Lalit Keshre, the chief executive and co-founder of Groww, said.
Indiabulls Housing Finance plans to grow its Real Estate Asset Management business through AIF structures in line with its asset-light strategy. While IBHFL will focus largely on retail disbursements, the AIF structure will be used for the wholesale opportunity of early-stage project finance, the statement 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," Gagan Banga, the Vice-Chairman and managing director of Indiabulls Housing Finance said. The Indiabulls Housing Finance scrip was trading 1.63 per cent down at Rs 183.80 a piece on the BSE.