Groww IPO: Indian Startup Backed by Satya Nadella to Go Public

Groww’s Upcoming IPO and the Trend of Indian Startups Returning Home

Groww, the leading retail brokerage in India, is preparing to enter the public markets with a substantial initial public offering (IPO). This listing is occurring shortly after the company completed a restructuring, moving its corporate base from Delaware back to India.

A Significant Listing and Exit Opportunity

This move positions Groww as potentially the first Indian startup to list domestically after relocating from the United States. The IPO is anticipated later this year and will serve as a key exit opportunity for several global venture capital funds.

Satya Nadella, CEO of Microsoft, alongside prominent investors like Peak XV Partners, Y Combinator, Ribbit Capital, and Tiger Global, have backed Groww. These four investment firms intend to sell approximately 394 million shares.

This represents roughly 9.4% of Groww’s total equity, making them the largest selling group, accounting for around 69% of the shares offered to the public.

The Return to India: A Growing Trend

Groww isn’t alone in this trend. Several Indian startups, including Pine Labs, Razorpay, Meesho, and Zepto, have recently shifted their headquarters back to India.

PhonePe, supported by Walmart, relocated from Singapore to India in 2022, and Flipkart, also backed by Walmart, announced similar plans earlier this year.

Last year, Groww pioneered this shift, moving its headquarters back from the U.S. and incurring approximately $159 million in taxes as a result.

Reasons for Relocation and IPO Benefits

Relocating to India allows startups to better align with local regulations and fulfill the requirements for listing on domestic stock exchanges.

Furthermore, tapping into India’s expanding retail investor base and increasing demand for IPOs presents a logical strategic advantage.

This trend demonstrates the increasing maturity and appeal of India’s capital markets in comparison to international alternatives.

Founder and Investor Stake

While U.S. investors are planning a significant divestment, Groww’s founders – Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal – are only selling about 4 million shares.

This constitutes just 0.7% of the total shares offered, indicating the founders’ commitment to retaining a substantial portion of their equity.

This contrasts with the established investors who are primarily utilizing the IPO as an exit strategy.

Financial Details of the IPO

Groww aims to raise ₹10.6 billion (approximately $121 million) through new funding during the IPO.

Additionally, existing shareholders will sell 574 million shares, with the IPO expected to be priced between ₹5-6 billion (roughly $568-$682 million).

The IPO is projected to value the Bengaluru-based company at $9 billion.

Groww’s Financial Performance

For the fiscal year ending March 31, Groww reported total income of ₹40.6 billion (about $462 million), a 45% increase year-over-year.

The company achieved a profit after tax of ₹18.2 billion (roughly $208 million), a significant turnaround from the net loss of approximately ₹8 billion (around $92 million) in the previous year.

The prior year’s loss was largely attributed to expenses related to the relocation of its Delaware headquarters.

Market Position and User Base

As of June, Groww had approximately 37.4 million individual demat accounts, representing nearly 19% of the Indian market.

The platform also boasts 12.6 million active clients on the National Stock Exchange, equating to a 26% market share.

Groww facilitates around 17 million active systematic investment plans (SIPs) and serves 9 million unique mutual fund investors.

Notably, it is the only investment app in India to surpass 100 million cumulative downloads.

Advisors to the Offering

JPMorgan Chase, Kotak Mahindra Bank, Citigroup, Axis Bank, and Motilal Oswal Investment Advisors are advising on the offering.