Groww, an India-based online investment platform, has recently announced the acquisition of Indiabulls Mutual Fund, an asset management company, for a total consideration of $;175 crore ($23.8 million).
Under the recent agreement, the digital platform will take over IBAMC (Indiabulls Asset Management Company) and the trustee company, which includes a cash & equivalent component of &$100 crore (&$13.6 million). The transaction is also subject to several regulatory approvals. Sources familiar with the matter have reportedly cited that the AIF (Alternate Investment Fund) and PMS (Portfolio Management Service) businesses will be demerged from the existing structure of IBAMC and operate under Indiabulls Housing Finance.
The latest announcement happened along the heels of Sebi’s approval of digital platforms such as fintech to foray into the mutual funds business. Groww has become the 1st fintech company to enter this asset management space. The recent selling of mutual funds will help support the capital position of its parent company, Indiabulls Housing.
Apparently, Groww caters to around 1.5 crore customers who invest in mutual funds, ETFs (exchange-traded funds), and stocks, and is planning to boost retail participation in equity. According to the company’s Chief Executive & Co-founder, Lalit Keshre, it has been targeting to simplify the accessibility to mutual funds by increasing transparency and lowering costs.
Indiabulls Housing Finance is notably planning to expand the Real Estate Asset Management business via AIF structures, which is a part of its asset-light strategy. IBHFL will place a high emphasis on retail disbursements, while the AIF structure is expected to leverage the wholesale opportunity of the early-stage project finance, sources added.
Gagan Banga, Indiabulls Housing Finance’s Vice Chairman & Managing Director, has reportedly stated that the company’s decision to divest interest in the retail mutual fund business is in line with its target to consolidate capital and lend greater focus on the development of its real estate asset management business through Alternate Investment Fund.