As reported by media, investment technology unicorn Groww, which is set for an IPO, has finalized a deal to purchase wealthtech startup Fisdom in an all-cash transaction.

The agreement, which gives Fisdom a valuation of roughly $150 million, requires regulatory approval.

“The move will enhance Groww’s capabilities and broaden its offerings in the wealth management sector.  “With Fisdom’s expertise and its established partnerships with 15 national and regional banks, including Punjab National Bank and Indian Bank, Groww can enhance its offerings and expand its customer base,” one of the sources said.

Groww opted not to comment on the situation, and Fisdom was not immediately available for comment.

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More than two months after it was reported that Fisdom would be valued at between $140 million and $160 million, the development occurred.  At that time, the two parties were at the early stages of discussions, and it was reported that Groww was considering other acquisitions as well.

After Indiabulls AMC, this is Groww’s second significant acquisition.  In September 2023, the fintech unicorn entered the asset management sector after SEBI approved the launch of its inaugural index fund.  At present, it provides 19 mutual fund schemes, encompassing equity, debt, hybrid, index funds, and others.  Groww had a total AUM of INR 1.9K Cr at the conclusion of FY24.

By acquiring Fisdom, Groww would be able to broaden its services and venture into new categories.  Fisdom, established in 2015 by Anand Dalmia and Subramanya SV, provides wealth management services that include mutual funds, stocks, bonds, and portfolio management services (PMS), among others.  It asserts that there are 1 million active customers using its services.

To date, the startup has secured approximately $42 million from investors including PayU, Quona Capital, and Saama Capital, among others.  Its most recent funding round was in January 202, when it secured $5 million at a valuation of $102 million.  The acquisition by Groww is therefore occurring at a valuation approximately 50% higher for the startup.

Fisdom reported a net loss of INR 57.4 Cr in its most recently disclosed financial results for FY24, which represents a decrease of approximately 19% from the INR 70 Cr loss it experienced in the prior fiscal year.  Operating revenue, however, saw an increase of 28% during the year in question, rising to INR 82.9 Cr from INR 64.7 Cr in FY23.

The acquisition coincides with Groww’s preparations for its IPO.  Reports indicate that the unicorn is seeking to submit its DRHP through the confidential route within the next fortnight.  It aims for a valuation of approximately $7 billion to $8 billion for its public offering.

Prior to this, the startup was actively working to resolve its long-standing cases with SEBI.  This week, the markets regulator issued two settlement orders related to Groww.  Groww paid INR 47.85 Lakh to resolve a case related to violations of stock broker regulations, after settling another case stemming from a technical glitch for INR 34.1 Lakh on Wednesday.

At the same time, Singapore’s sovereign wealth fund GIC is obtaining more than a 2% stake in the brokerage that is set to go public.  This week, Groww applied to the CCI for approval of the aforementioned transaction.