Wealthtech unicorn Groww has signed a definitive agreement to acquire wealth-tech startup Fisdom in an all-cash deal, subject to regulatory approval, according to sources aware of the matter. The acquisition comes as Groww prepares to file its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) within the next 10-14 days.
This marks Groww’s second major acquisition after its purchase of Indiabulls Asset Management Company (AMC) in May 2023, signaling the company’s expansion strategy ahead of its planned public listing.
Founded in 2015 by Anand Dalmia and Subramanya S.V., Fisdom offers digital wealth management solutions including mutual funds, stocks, bonds, portfolio management services (PMS), and tax filing solutions.
“This strategic move is expected to bolster Groww’s capabilities and expand its offerings in the wealth management sector,” said a person familiar with the matter, who requested anonymity as the deal has not been officially announced.
Fisdom serves over 1 million customers through more than 15 offices across India and has secured backing from prominent investors such as Prosus, Saama, and Quona Capital. The company’s established partnerships with 15 national and regional banks, including Punjab National Bank and Indian Bank, are expected to provide Groww with valuable distribution channels.
Fisdom posted revenue of Rs 84 crore in FY24, a 28% increase from the previous year, and reduced its net losses by 19% to Rs 57.4 crore. The company also reportedly achieved EBITDA profitability in the March quarter of FY24.
The acquisition comes as Groww is looking to raise approximately $200-250 million in a pre-IPO funding round led by Singapore’s sovereign wealth fund GIC, which is expected to invest about $150 million. This financing round would value Groww at around $7 billion post-money, marking a substantial increase from its last private market valuation of $3 billion in 2021.
GIC has already sought approval from the Competition Commission of India (CCI) to acquire a 2.14% stake in Groww through an affiliate entity.
Groww has been preparing to go public since some time now. In November last year, it shifted domicile from the US to India, in order to facilitate the listing in India.
Sources suggest that Groww’s upcoming IPO could potentially raise over $1 billion, with the company targeting a valuation between $6-8 billion. The offering is expected to be a combination of fresh issue and offer-for-sale (OFS).
Groww, which started as a mutual fund investing platform in 2016, has steadily expanded its offerings by introducing stocks, IPOs, and ETFs in 2020. The company achieved a significant milestone in September 2023 when it became India’s largest stockbroker in terms of active clients, according to the National Stock Exchange (NSE). As of April, Groww has maintained its leadership position with a market share exceeding 26%.
In FY24, Groww reported revenue of Rs 3,145 crore with an operating profit of Rs 535 crore.
Groww completed the acquisition of Indiabulls AMC in May 2023 to build an asset management business. The acquisition of Fisdom is expected to help build its wealth management business.
Groww and Fisdom did not immediately respond to requests seeking comments at the time of going to the press.