The transaction is expected to be concluded by 30 June 2022, IBHFL stated as a part of its filings to BSE Ltd.
The sale of Indiabulls Asset Management Company will be limited only to the mutual fund part of the business, while the alternative investment fund (AIF) and the portfolio management service business will be demerged from the existing structure, and remain under Indiabulls Housing Finance, subject to regulatory approvals
The acquisition will now allow Groww to even create newer investment products, besides its initial model of distributing direct mutual funds on its platform.
“Over the last five years, we have made investing simple and transparent for retail investors across the length and breadth of the country. We have experienced the power of technology in enabling the access of financial services to even those who do not live-in metros or who are not HNIs. With the capability to create products, we plan to make mutual funds even more accessible by making them simpler, more transparent, and by lowering the cost further,” said Lalit Keshre, chief executive and co-founder of Groww.
As a part of the filings, Indiabulls Housing Finance said that it will narrow its focus on its real estate asset management business through AIF structures, as it looks to operate with an asset-light strategy.
“The real estate asset management business is complementary to the core business of the company and the sponsor (IBFHL) plans to grow this business in partnership with global player(s). Therefore, the mutual fund business does not remain a core focus area for the company,” stated Indiabulls, as a part of its filing.
While IBHFL will focus largely on retail disbursements, the AIF structure will be used for the wholesale opportunity of early-stage project finance, the company stated.
“We have made the decision to divest our interest in the retail mutual fund business to be able to consolidate capital and provide greater focus in building the company’s real estate asset management business by way of AIF, in line with the company’s asset light strategy,” said Gagan Banga, vice chairman and managing director, Indiabulls Housing Finance.
At present, Groww claims it has 15 million users, with 250,000 systematic investment plans opened every month on its platform. Between September 2020 and April 2021, it has signed up nearly 7 million users, with 60% of its users in tier-II cities and beyond, the company said.