Groww AMC's valuation surges 14x in under three years as US firm to pick 23% stake for Rs 580 crore

Groww

• Groww sells 23 percent stake in AMC to State Street for Rs 580 crore
• Groww retains 77 percent stake and full control of AMC after the deal
• Groww shares rose over 5 percent, now up 73 percent from IPO price

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Groww is selling 23 percent stake in its AMC business to US-based State Street Global Advisors for Rs 580 crore. This implies a return of more than 14x for the newly-listed brokerage platform's investment in mutual fund business.

The company had acquired 100 percent stake in Indiabulls' mutual fund business, now known as Groww Mutual Fund, for Rs 175 crore in 2023. The current partial stake sale would value Groww Mutual Fund at around Rs 2,500 crore.

The State Street transaction is structured in two parts - Rs 381 crore will be routed to Groww through a secondary share sale and Rs 199 crore will be infused as primary capital into the AMC. Groww will continue to hold a majority stake of 77 percent in the AMC, and retain full operational control. The buyer will not hold more than 4.99 percent of the aggregate voting power of Groww AMC.

State Street Global Advisors is among the world’s largest asset managers, ranking fourth globally after BlackRock, Fidelity and Vanguard.

Groww Co-founder and Chief Operating Officer (COO) Harsh Jain said the partnership would enable the company to bring "global best practices and sophisticated investment products to Indian investors".

State Street Investment Management CEO Yie-Hsin Hung said the tie-up allows the firm to participate directly in the growth of India’s domestic asset management market while building a pipeline of Indian investment exposures for global distribution.

Groww share price:

Groww shares jumped more than 5 percent to close at Rs 173 apiece. The shares of the company made a decent debut on stock markets on November 12, listing with a premium of 12 percent over the IPO price at Rs 112 apiece on NSE. The stock then surged around 94 percent from its IPO price in just five sessions to hit a high of Rs 193.80 apiece on November 18.

The stock has fallen around 11 percent since then. However, it is still up 73 percent from its IPO price of Rs 100, and around 54.5 percent from its listing price of Rs 112 on NSE. Its market capitalization currently stands at around Rs 1.07 lakh crore.