Groww to acquire Indiabulls Housing Fin’s MF business

Nextbillion Technology Pvt. Ltd, which operates wealth management platform Groww, has entered into a definitive agreement with Indiabulls Housing Finance Ltd (IBHFL) to acquire the mutual fund business of its subsidiaries Indiabulls Asset Management Company Ltd (IAMCL) and Indiabulls Trustee Company Ltd, the trustee of IAMCL, for ₹175 crore, it said on Tuesday.

The deal includes a cash equivalent of ₹100 crore, to be invested by Groww, and is subject to regulatory approvals by the Securities and Exchange Board of India (Sebi). The transaction is expected to be concluded by June 30, 2022, IBHFL said in a filing on BSE.

The sale of IAMCL will be limited only to the mutual fund part of the business, while the alternate investment fund (AIF) and portfolio management service (PMS) will be de-merged from the existing structure and remain under IBHFL, subject to regulatory approvals.

The acquisition will allow Groww to create newer investment products. “Over the last five years, we have made investing simple and transparent for retail investors across 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 high networth individuals. With the capability to create products, we plan to make mutual funds even more accessible by making them simpler and more transparent, and by lowering the cost further,” said Lalit Keshre, CEO and co-founder of Groww.

As a part of the filings, Indiabulls will narrow its focus on its real estate asset management business through AIF structures, as it aims to have an asset-light strategy. “The real estate asset management business is complementary to the core business of the company and the sponsor IBHFL 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 firm,” Indiabulls said as a part of its filing.

IBHFL will focus on retail disbursements, while the AIF structure will be used for the wholesale opportunity of earlystage project finance, the company said. “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, IBHFL.