Country’s largest brokerage firm Groww has agreed to acquire wealth management startup Fisdom in a \$150 million all-cash deal, according to a source close to the development.The acquisition comes a fortnight before Groww is expected to file for IPO through the confidential route with the markets regulator Sebi, as reported by Moneycontrol on May 15. The deal is subject to Sebi approval and is likely to take 2-3 months.
The company has also raised \$150 million funding from Singapore-based investment firm GIC at a post-money valuation of \$7 billion as part of a larger $250-300 million pre-IPO round, which is expected to close within the next two weeks.
The 100% acquisition will expand Groww’s product offerings, ahead of its IPO in a choppy and volatile market. This will be Groww’s second large acquisition after its acquisition of Indiabulls AMC in May 2023.Unlike the other large brokerage houses, Groww has a strong distribution of mutual fund (including its own) and systematic investment plans (SIP) portfolio with its large customer base, effectively diversifying its revenue to shield itself from any downturn in stock trading.Founded in 2015 by Anand Dalmia and Subramanya S.V., Fisdom offers mutual funds, stocks, bonds, portfolio management services (PMS), and tax filing solutions. The company has over a million customers catered through 15 offices across India. The company is backed by investors such as Prosus, Saama, and Quona Capital.Fisdom posted a revenue of ₹84 crore in FY24, a 28% increase from the previous year and a 19% reduction in net losses to ₹57.4 crore. According to a second source, the company also achieved EBITDA profitability in the March quarter of FY25.Groww began in 2016 as a mutual fund investing platform and steadily expanded its offerings by introducing stocks, IPOs, and ETFs in 2020.
The company is likely to go for the IPO at a conservative valuation of between $7-8 billion for a new-economy company with high growth potential, because of the market sentiment and volatility.Groww, the country’s largest stock broking firm by active investor base, has more than doubled its FY24 revenue to ₹3,145 crore at a consolidated level. The company’s FY25 numbers are not yet public and is likely to be part of the DRHP data.Its consolidated operational profit rose 17% to ₹535 crore in the year ended March 2024, compared with ₹458 crore it had reported a year back. Its consolidated revenue for FY23 stood at ₹1,435 crore.The one-time domicile tax of ₹1,340 crore resulted in Groww posting a ₹805 crore net loss at the consolidated level. Groww has moved its registered office from Delaware in the US to Bengaluru during FY24.Tough times for brokersGroww’s IPO process is starting at a difficult time for most brokers, as a few regulations have hurt the industry. The negative investor sentiment has also resulted in all four top brokers seeing a third straight month of decline in active investors.Groww saw around 75,000 fewer active investors in April, while the second-largest broker, Zerodha, saw its active investor base decline by more than 55,000 users.For Bengaluru-based Zerodha, which pioneered the discount broking/zero brokerage model in India, this was the fifth consecutive month of decline in active investors.Broking firms are bracing for higher taxes on trading, lower exchange rebates, and stricter restrictions on retail futures and options trading since late last year. Most broking firms could see a 30–50% hit to the topline during the second half of FY25.Angel One, which is listed in the markets, reported a 49% fall in net profit for the three months ended March 31, 2025, to ₹175 crore, compared to ₹340 crore reported in the corresponding quarter in FY2024. Consolidated revenue sank 22% to ₹1,056 crore, sinking from ₹1,357 crore posted in the same period last year.
