Hornbill, MUFG to lead Dhan's $200 million fundraise at over $1 billion valuation

The company also competes with Groww, Zerodha, Upstox and several other discount brokers.

Raise Financial Services, the company that operates investing and trading app Dhan, has entered into an agreement to raise around $120-150 million (Rs 1,000-1,300 crore) from Hornbill Capital, an India-focused hedge fund, and Mitsubishi UFJ Financial Group (MUFG), a leading Japanese bank, sources told Moneycontrol.

“Dhan’s deal with Hornbill and MUFG is done. The two investors will put in a bulk of the money Dhan plans to raise in this round,” one of the persons cited above said.

Even as discussions are in the final stages, Dhan plans to increase the total round size to around $200 million (Rs 1,700 crore) and is currently deliberating on a third institutional investor.

“Dhan also has term sheets from ChrysCap, TPG and Alpha Wave. However, Pravin (founder of Dhan) is yet to zero in on one of those names and decide which one of them will participate in this round along with Hornbill and MUFG,” a second source told Moneycontrol.

The total money will largely come in as primary capital but there will be a small secondary share sale component also as existing investors make way for new ones.

While the company is in the midst of picking its third institutional investor, sources told Moneycontrol that fantasy gaming platform Dream11’s CEO and co-founder Harsh Jain, an existing angel investor, is also doubling down on Dhan as part of the ongoing round in his personal capacity.

Dhan, Hornbill Capital, MUFG, Harsh Jain, ChrysCap, TPG and Alpha Wave did not reply to Moneycontrol’s queries seeking details.

The round values the company at around $1.2-1.5 billion, significantly higher from around $150 million earlier, sources said. The significant jump in valuation is largely because of how profitably Dhan has scaled.

Currently, Dhan clocks a profit after tax (PAT) of around $40 million (Rs 340 crore) and is raising capital only to tap more users and expand its offerings.

ALSO READ: Dhan turns profitable with Rs 177 crore in FY24 as revenue surges by 689%

The fresh funds will be used for business needs and expansion to take on competitors. While the company already offers investing and wealth-related services, it is also foraying into financing, payments, insurance and more, as per the company website, to grab a larger market share.

Moneycontrol was first to report on Dhan’s plans to raise over $100 million at a valuation of over $1 billion, or a unicorn, back in July 2024.

Founded in 2021, Dhan competes with IPO-bound Groww, Zerodha, Upstox and several other discount brokers.

The return of Pravin Jadhav

Prior to Dhan, Pravin Jadhav, co-founder and CEO earned his spurs growing and scaling Paytm Money, the brokerage arm of the fintech giant.

However, he parted ways on unpleasant terms in March 2020, joining a slew of other senior leaders who had quit around that time. Since then, Paytm Money has ceded market share to its rivals and recently made leadership changes in an effort to resuscitate this business.

For Dhan, the new round will be its largest since its inception in 2021. The company, so far, has raised only around $25 million from 3one4 Capital, Beenext, Mirae Asset and several other angel investors.