Groww Set to Make Historic IPO Move in India
A New Chapter for India’s Largest Retail Brokerage
Groww, the leading retail brokerage firm in India, is preparing to enter the public markets with a multi-billion-dollar initial public offering (IPO). This significant move comes just over a year after the company relocated its corporate headquarters from Delaware back to India, positioning it to potentially become the first Indian startup to list domestically after such a transition.
Backing from Industry Giants
The IPO, anticipated later this year, is not just a milestone for Groww but also a major exit opportunity for prominent global venture capital firms. Notable investors include Microsoft CEO Satya Nadella, Y Combinator, Ribbit Capital, and Tiger Global. According to the draft IPO documents filed on Tuesday, these investors plan to sell approximately 236 million shares, which constitutes about 5.6% of Groww’s total equity. This selling bloc represents around 41% of the total shares being offered to the public, underscoring the scale of this offering.
The Trend of Relocation
Groww is not alone in its decision to shift its headquarters back to India. Other Indian startups, such as Pine Labs, Razorpay, Meesho, and Zepto, have also made similar moves. In 2022, PhonePe, backed by Walmart, relocated from Singapore to India, and earlier this year, Flipkart announced its own plans to return to Indian soil. This trend reflects a broader shift in the startup ecosystem, as companies seek to align with evolving local regulations and capitalize on the burgeoning retail investor base in India.
Financial Implications of the Move
Last year, Groww became one of the first startups to make the significant decision to move its headquarters back to India, incurring around $159 million in taxes as part of the process. This relocation not only helps startups comply with local regulations but also positions them favorably for domestic stock listings. The growing maturity of India’s capital markets, coupled with an increasing appetite for IPOs, makes this a strategic move for many firms.
Founders Retain Majority Stake
While U.S. investors are set to offload a substantial portion of their holdings in Groww, the company’s founders-Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal-are selling only about 4 million shares, which is a mere 0.7% of the total offer for sale. This indicates that the founders are retaining a significant majority of their equity, contrasting sharply with the established investors who are using the IPO as a means to exit.
Financial Performance and Future Prospects
Groww aims to raise ₹10.6 billion (approximately $121 million) through the IPO, alongside a secondary sale of 574 million shares by existing shareholders, which is expected to be priced between ₹5-6 billion (roughly $568-$682 million). The IPO is projected to value the Bengaluru-based company at around $9 billion.
In the fiscal year ending March 31, Groww reported a total income of ₹40.6 billion (about $462 million), marking a 45% year-on-year increase. The company also achieved a profit after tax of ₹18.2 billion (approximately $208 million), a significant turnaround from the previous year when it posted a net loss of about ₹8 billion (around $92 million), largely due to expenses related to its headquarters relocation.
Market Position and User Base
As of June, Groww boasted approximately 37.4 million individual demat accounts, which represent nearly 19% of India’s market. The platform also had 12.6 million active clients on the National Stock Exchange, equating to a 26% market share. Additionally, Groww recorded around 17 million active systematic investment plans (SIPs) and 9 million unique mutual fund investors, making it the only investment app in India to surpass 100 million cumulative downloads.
Advisory and Support
The IPO is being advised by a consortium of financial institutions, including JPMorgan Chase, Kotak Mahindra Bank, Citigroup, Axis Bank, and Motilal Oswal Investment Advisors. Their expertise will be crucial in navigating the complexities of the public offering and ensuring a successful launch.
Conclusion
Groww’s impending IPO marks a pivotal moment not only for the company but also for the Indian startup ecosystem. As it prepares to make its debut in the public markets, the firm stands as a testament to the evolving landscape of India’s capital markets. With a strong backing from notable investors and a robust user base, Groww is poised to leverage its position and contribute to the growing trend of Indian startups returning home to tap into local opportunities. As the IPO approaches, all eyes will be on Groww to see how it navigates this critical juncture in its journey.
