Online investment platform Groww announced that it will be acquiring Indiabulls Mutual Fund for a total consideration of Rs 175 crore.
The digital platform will acquire Indiabulls Asset Management Company (IBAMC) and the trustee company for Rs 175 crore, which includes a cash and equivalent component of Rs 100 crore, an official statement said, adding that the transaction is subject to regulatory approvals.
The Alternate Investment Fund (AIF) and Portfolio Management Service (PMS) businesses will be demerged from the existing IBAMC structure, and remain under Indiabulls Housing Finance, it said.
The announcement comes months after capital markets regulator Sebi had allowed digital platforms like fintechs to enter the mutual funds business and Groww becomes the first fintech to enter the asset management space.
Indiabulls Mutual Fund has 13 funds with the Quarterly Average Assets Under Management at Rs 663.68 crore as of March 2021, down from the 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.
Groww Cofounder and Chief Executive Officer Lalit Keshre said with the capability to create products, Groww plans to make mutual funds even more accessible.
“It can be made more accessible by making them simpler, more transparent, and by lowering the cost further,” said
Groww Cofounder and Chief Executive Officer Lalit Keshre.
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.
Indiabulls Housing Finance Vice Chairman and Managing Director Gagan Banga said Indiabulls has made the decision to divest its interest in the retail mutual fund business to be able to consolidate capital.
“It will 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,” said Gagan Banga.