The stock broking industry has become intensely competitive over the last two years, with key players expanding their offerings to include a wider array of investment products. Following Groww’s venture into mutual funds, Zerodha, a leading stock brokerage, partnered with Smallcase to launch Zerodha Fund House, setting up an asset management company (AMC) in 2023.
Currently, Zerodha Fund House is seeking external funding, according to three sources familiar with the discussions. “Preliminary talks are underway with several investors to secure up to $100 million in funding for the AMC venture,” one source revealed, preferring to remain anonymous.
This funding effort marks a significant departure for the Zerodha Group, which has been self-funded since its inception in 2010 by the Kamath brothers.
“Discussions are at an exploratory stage, and it may take several months for Zerodha Fund House to close the deal,” another source added, requesting anonymity due to not being authorized to speak publicly.
It’s important to note that while talks are ongoing, the deal is not guaranteed.
Zerodha Fund House operates under Zerodha Assets Management Private Limited. Research from TheKredible, a startup data intelligence platform, shows that Zerodha Broking holds a 70% equity stake, with Smallcase owning the remainder.
The AMC has already launched two index funds—the Zerodha Nifty LargeMidcap 250 Index Fund and the Zerodha ELSS Tax Saver Nifty Large MidCap 250 Index Fund—comprising a portfolio of 250 Indian companies. Additionally, it has introduced a Liquid fund with assets under management (AUM) of Rs 311 crore and a Gold ETF with an AUM of Rs 35 crore.
Entering the AMC sector aligns with Zerodha’s strategy to diversify its wealth management offerings alongside its core stock broking services.
As of the time inquiries were made to Zerodha Fund House and Smallcase, no response had been received. This story will be updated if new information becomes available.
The stock broking field is dominated by four main competitors: Zerodha, Groww, AngelOne, and Upstox, with Groww recently overtaking Zerodha in user numbers as of October last year. Notably, all four companies reported profitability for the fiscal year ending March 2023.
