Groww Aims for $6.5 Bn Valuation with $200M Pre-IPO Fundraise

India’s stockbroking industry has rapidly evolved, with digital platforms expanding market access. Bengaluru-based investment platform Groww has emerged as the country’s largest stockbroker in terms of active clients. As it prepares for a public listing, Groww is in talks to raise $200 million in pre-IPO funding. 

According to sources familiar with the matter, Groww is currently evaluating a $200 million fundraising and has held talks with Singapore’s sovereign wealth fund, GIC, and its existing investor, Tiger Global. If this deal materializes, the company’s valuation could reach approximately $6.5 billion, significantly higher than its last valuation of around $3 billion during its previous funding round in 2021. Source: Economic Times

GIC’s involvement highlights its ongoing interest in India’s fintech industry. The sovereign wealth fund has previously invested in several fast-growing Indian startups across various sectors, including Flipkart, Delhivery, Swiggy, Razorpay, and Cred. Source: TimesofIndia

This move comes at a time when Groww’s competitors, including Mumbai-based brokerage firm Dhan, are also in discussions with investors for large funding rounds, indicating a broader trend of fintech firms gearing up for expansion and public listings.

Groww Competing in a Fast-Growing Market

Groww, which started its journey as a direct mutual fund distribution platform, has now evolved into the country’s largest stockbroker in terms of active clients. According to NSE data, as of February, Groww had an active trader base of approximately 13 million users, surpassing other leading brokerage firms like Zerodha, which had around 8 million active users, and Angel One, which had approximately 7.7 million.

The Pre-IPO Fundraising Strategy

Groww’s plans for a pre-IPO funding round are crucial as the company looks to strengthen its financial position before entering the public markets. 

In January, reports surfaced that Groww was likely to raise around $700 million through its IPO, joining the wave of Indian startups that have opted for local listings in recent years. The pre-IPO fundraising appears to be part of a larger strategy to ensure that the company has sufficient capital to navigate the stock market debut and sustain its operations in the long run. Source: Economic Times

Moving Its Domicile to India

A key development in Groww’s journey towards its IPO was the company’s decision to shift its domicile from the US to India in November last year. The move aimed to facilitate its listing on the Indian stock exchanges, allowing it to align with regulatory requirements and attract domestic investors.

For many Indian startups that initially incorporated abroad, moving their domicile back to India has become a strategic step before an IPO. This relocation helps companies avoid potential legal and tax complexities while also making it easier for Indian investors to participate in their stock offerings. 

Financial Performance and Revenue Growth

Despite its rapid growth, Groww has faced financial challenges, including a notable net loss in FY24. The company reported revenues of Rs 3,145 crore for the fiscal year but also recorded a net loss of Rs 805 crore. This loss was largely attributed to a one-time tax payout to US authorities as part of its return to India. Source: Economic Times/ TimesofIndia

Expanding Beyond Stockbroking

In addition to its core stockbroking services, Groww has been actively working towards diversifying its business. 

• Reports indicate that the company has engaged in discussions to acquire Fisdom, a wealth management platform backed by PayU. This potential acquisition aligns with Groww’s broader strategy of expanding into wealth management and offering its users a wider range of financial products.
• Besides wealth management, Groww has also ventured into the consumer durables loan segment. The company has launched financial products aimed at helping users finance big-ticket purchases, further strengthening its position as a comprehensive financial services provider.
• To support its diversification plans, Groww has also introduced a new business unit called ‘W,’ which is dedicated to wealth management services. As competition intensifies in the fintech space, companies like Groww are increasingly focusing on expanding their product offerings to cater to a broader audience and create additional revenue streams.

Regulatory Challenges and Market Trends

While Groww has been on an upward trajectory, regulatory developments in the financial markets have posed challenges for new-age brokerage firms. The Securities and Exchange Board of India (Sebi) recently tightened its regulations around futures and options (F&O) trading, a segment that contributes significantly to the revenue of digital brokerage platforms.

With over 70% of revenues coming from F&O trading, many brokerage firms, including Groww, have experienced an impact due to these regulatory changes. In February, the number of active traders on Groww’s platform dropped by more than 200,000, marking the first decline in two years. Competitors like Zerodha and Angel One also witnessed a reduction in their active trader base by around 150,000 users during the same period.

Industry experts have pointed out that these regulatory changes could shift trading patterns, prompting brokerage firms to explore alternative revenue sources. Zerodha’s co-founder and CEO, Nithin Kamath, had previously stated that the new regulations could lead to a 30% decline in trading volumes across the industry.  Source: Economic Times

The Road Ahead for Groww

As Groww prepares for its IPO, its ability to navigate regulatory changes, expand its product portfolio, and secure strong investor backing will be crucial. The pre-IPO funding round, if finalized, will provide the company with additional capital to strengthen its operations and scale its business.

​In the bustling world of Indian fintech, Groww has rapidly emerged as a standout player. Starting as a direct mutual funds distributor, it has transformed into the country’s largest stockbroker by active clients. The Bengaluru-based startup is reportedly in talks to raise $200 million in a pre-IPO funding round, potentially valuing the company at around $6.5 billion.

Aiming for New Heights

This potential funding round involves discussions with Singapore’s sovereign wealth fund, GIC, and existing investor Tiger Global. If successful, this would double Groww’s valuation from its last fundraising in 2021, pegged the company at approximately $3 billion.

Preparing for Public Listing

The anticipated $200 million infusion is expected to precede Groww’s initial public offering (IPO), with plans to raise around $700 million through the listing. This move aligns Groww with other modern startups venturing into the public markets in recent years.

Dominating the Market

According to data from the National Stock Exchange (NSE), as of February 2025, Groww boasts an active trader base of approximately 13 million users. This positions it ahead of competitors like Zerodha, with 8 million users, and Angel One, with around 7.7 million.

Strategic Moves

In November 2024, Groww relocated its domicile from the US to India, a strategic decision aimed at facilitating its listing on Indian stock exchanges. This move underscores the company’s commitment to strengthening its presence in the Indian market.

Financial Performance

For the fiscal year ending in 2024, Groww reported revenues of ₹3,145 crore. However, the company also recorded a net loss of ₹805 crore, attributed to a one-time tax payout to US authorities related to its domicile shift back to India.

Diversifying Offerings

In a bid to broaden its service portfolio, Groww has been in talks to acquire Fisdom, a wealth management firm backed by PayU. Additionally, the company has introduced consumer durable loans and is establishing a new business unit, ‘W’, to focus on wealth management services.

Navigating Regulatory Changes

These developments occur amid increased scrutiny from the Securities and Exchange Board of India (SEBI) on futures and options (F&O) trading. New-age brokerages, which derive a significant portion of their revenue from F&O trades, have felt the impact of these regulatory changes. In February, Groww experienced a decline of over 200,000 active traders from the previous month, marking its first drop in two years. Competitors like Zerodha and Angel One also saw reductions of approximately 150,000 users each during the same period.

Industry Perspectives

Nithin Kamath, co-founder and CEO of Zerodha, commented on the situation, noting a more than 30% drop in activity across brokers. He highlighted that the industry is experiencing a downturn in business for the first time in 15 years.

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