Unlike its peer Zerodha which has applied for a mutual fund (MF) licence, Fisdom’s aspirations for its AMC are towards launching portfolio management services (PMS) for high net-worth individuals (HNIs) on its platform.
It will set up a separate entity — Fisdom Asset Management Company — under parent entity Finwizard Technology, to apply for the licence.
At present, Fisdom runs a private wealth business which provides wealth management services to HNIs. This continues to be a high-margin business for the firm.
“The AUM (asset under management) growth of PMS over the last five years is more than net equity MF AUM in the country. Our PMS licence will be linked to our private wealth business. There are already enough and more products in the mutual funds space at present. However, to be fair, we may look at an MF licence later,” said Subramanya.
Fisdom may explore at a new funding round to capitalise its AMC, Subramanya added.
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Founded in 2015, PayU-backed Fisdom lets users invest in mutual funds, pension funds, sovereign gold bonds, and non-convertible debentures among other asset classes. In February 2021, the company acquired Jaipur-based income tax return filing platform Tax2Win to enter the tax solutions segment. Subsequently, it entered the stock broking segment. According to Subramanya, Fisdom clocked total revenues of Rs 75 crore in FY23. The platform at present manages almost Rs 5,000 crore in AUM, of which 40% comes from its HNI-focused private wealth business.
The eight-year-old fintech expects to turn profitable by FY24.
“The wealth management business, where we act as a distributor of products, is already profitable. We started taxes in 2020, it is at break even stage now. On stock broking, we are presently in investment mode and it will take us 9-12 months to break even,” he said.
Fisdom claims it has 600,000 users who have opened systematic investment plans (SIPs) on its platform, while its stock broking arm has 100,000 users.
Fintechs in the wealth management space are increasingly eyeing AMC licences to introduce newer products and increase overall margins.
In April, Zerodha co-founder Nithin Kamath took to the microblogging website Twitter to announce its joint venture (JV) with the wealth management platform Smallcase for the mutual fund business.
This month, rival Groww completed the acquisition of the mutual fund business of Indiabulls Housing Finance (IBHFL) for Rs 175.6 crore after receiving the necessary approvals. With the entity, Groww is looking to launch passive funds in the market.