Zerodha is launching its AMC business in partnership with Smallcase, a company which was incubated within Rainmatter, its in-house corporate fund. Earlier this year in April, both Zerodha and Smallcase had announced that they would form a joint venture to launch the Zerodha AMC business.
While Zerodha is still bootstrapped, Smallcase is backed by the likes of Amazon, HDFC Bank, Peak XV Capital (Sequoia India) and many others.
Taking to X (previously Twitter) Kamath said that there were two reasons which motivated Zerodha to launch an AMC business.
The first, he said, was that even after so much growth over the last three years, there are only around six to eight crore unique equity investors. The second was the need for the market to have simple products so that the next one crore investors could enter into this space quickly.
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“They needed simple products they could understand and mutual funds were a perfect instrument,” Kamath said on X.
The company also confirmed the appointment of Vishal Jain as the new CEO of its AMC business. Jain is a veteran manager of the exchange-traded fund industry and was at Nippon India Mutual Fund for five years before joining Zerodha.
The company could launch its first fund offer pretty soon, Kamath said.
An asset management company is one which produces its own mutual funds, which can be sold through distributors or through direct channels. Zerodha all these years has been a distributor of direct mutual funds. It ran a platform named Coin for this business. But now, with the final approval in place, it will formally foray into the financial products creation space.
Another fintech that has set up its own AMC business is Sachin Bansal-promoted Navi. Navi acquired Essel Mutual Fund to get its own licence. Groww, a competitor to Zerodha in the broking and mutual fund space, is also looking to set up its own AMC business through the acquisition of Indiabulls AMC.
What started with broking, has now expanded into a complete wealth management suite at Zerodha. The privately held company was founded by Nithin Kamath and his brother Nikhil Kamath in 2010.
ET had reported on April 11 that the Bengaluru-headquartered brokerage is expected to clock total revenue (including interest income from its own investments) of around Rs 5,956.8 crore and net profit of Rs 2,513.6 crore in fiscal year 2023. These numbers were not audited.