Groww, Supported by Satya Nadella, Poised to be First Indian Startup to Go Public
Groww, India’s leading retail brokerage firm, is preparing to make a significant impact on the country’s public markets with a multi-billion-dollar initial public offering (IPO). This move comes just over a year after the company relocated its corporate headquarters from Delaware back to India, potentially making it the first Indian startup to list domestically after such a transition. The IPO is anticipated to provide a major exit opportunity for several global venture capital firms.
Major Investors and Share Offerings
Groww’s upcoming IPO is backed by prominent investors, including Microsoft CEO Satya Nadella, Y Combinator, Ribbit Capital, and Tiger Global. According to the draft IPO documents filed recently, 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. While these established investors are looking to capitalize on the IPO as an exit strategy, the company’s founders are taking a different approach. They plan to sell only about 4 million shares, or 0.7% of the total offering, indicating their commitment to retaining most of their equity in the firm.
Trends in Startup Relocation
The trend of Indian startups relocating their headquarters back to India has gained momentum recently. Companies like Pine Labs, Razorpay, Meesho, and Zepto have made similar moves. Notably, PhonePe shifted its headquarters from Singapore to India in 2022, and Flipkart announced its plans to do the same earlier this year. These relocations allow startups to better align with local regulations and fulfill requirements for domestic stock listings. Additionally, they can tap into India’s growing retail investor base and increasing appetite for IPOs, reflecting the maturation of the country’s capital markets.
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 valued between ₹5 billion and ₹6 billion (roughly $568 million to $682 million). The IPO could 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% increase year-on-year. The company also achieved a profit after tax of ₹18.2 billion (approximately $208 million), a significant turnaround from the previous year’s net loss of ₹8 billion (around $92 million), largely due to costs associated with its relocation.
Market Position and User Base
As of June, Groww boasts approximately 37.4 million individual demat accounts, which represent nearly 19% of India’s market share. The platform also has 12.6 million active clients on the National Stock Exchange, equating to a 26% share. Additionally, Groww has 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. 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.
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