Microsoft CEO-backed Groww files draft IPO papers with SEBI via confidential route

Mutual fund investment platform Groww has filed draft IPO papers with capital markets regulator SEBI through a confidential pre-filing route. The confidential pre-filing route allows a company to withhold public disclosure of details under the draft red herring prospectus (DRHP).

In a public announcement on May 25, the brokerage firm said it has "filed pre-DRHP with SEBI and the stock exchanges under...ICDR Regulations in relation to the proposed initial public offering of its equity shares on the mainboard of the stock exchanges".

However, it clarified that pre-filing DRHP does not guarantee the company will go ahead with the initial public offering (IPO).

Groww's public filing was made under Billionbrains Garage Ventures Ltd, the company's registered corporate entity.

The fintech firm plans to list its equity shares with a face value ₹2 each on the NSE and BSE's mainboards.

It was earlier reported that Groww was simultaneously raising $150 million from Singapore-based GIC as part of a $250–300 million pre-IPO round. The report also mentioned that Groww's post-money valuation in the round stood at $7 billion.

The market watchdog is expected to take up to two months to approve the IPO, following which Groww will file an updated DRHP, which will be accessible to the public and will have the details on the company's financial performance up to the latest quarter.

Groww’s IPO process is starting at a difficult time for most brokers, as a few regulations have hurt the industry. The negative investor sentiment has also resulted in all four top brokers seeing a third straight month of decline in active investors.

Groww saw around 75,000 fewer active investors in April, while the second-largest broker, Zerodha, saw its active investor base decline by more than 55,000 users.

Groww began in 2016 as a mutual fund investing platform and steadily expanded its offerings by introducing stocks, IPOs, and ETFs in 2020.

Groww, the country's largest stock broking firm by active investor base, has more than doubled its FY24 revenue to ₹3,145 crore at a consolidated level. The company’s FY25 numbers are not yet public and is likely to be part of the DRHP data.

Its consolidated operational profit rose 17% to ₹535 crore in the year ended March 2024, compared with ₹458 crore it had reported a year back. Its consolidated revenue for FY23 stood at ₹1,435 crore.

The one-time domicile tax of ₹1,340 crore resulted in Groww posting a ₹805 crore net loss at the consolidated level. Groww has moved its registered office from Delaware in the US to Bengaluru during FY24.

Groww is backed by marquee investors like Tiger Global, Peak XV (formerly Sequoia Capital India), Ribbit Capital, Y Combinator, and Microsoft CEO Satya Nadella.