Zerodha, the pioneering stock broking startup, has obtained the final regulatory clearance from the Securities and Exchange Board of India (Sebi) to launch its asset management business, as announced by CEO Nithin Kamath on Friday. The firm is set to collaborate with Smallcase, a project nurtured within Zerodha's in-house corporate fund Rainmatter, to establish the Zerodha Asset Management Company (AMC). This strategic move comes in line with Zerodha's vision to make investing more accessible and straightforward, particularly to the potential next wave of 10 million investors.
Kamath highlighted two primary motivations behind this expansion. First, despite substantial growth over the past three years, the equity investor base remains relatively small, with only approximately 60-80 million unique participants. Second, Zerodha recognized the necessity for user-friendly financial instruments to accommodate the quick entry of the next wave of investors, who may require simpler products to understand and engage with. Kamath noted that mutual funds, known for their accessibility and ease of comprehension, align with these objectives perfectly.
Vishal Jain, a seasoned professional in the exchange-traded fund industry, has been appointed as the new CEO of Zerodha's AMC business. Previously associated with Nippon India Mutual Fund for five years, Jain brings his wealth of expertise to lead the company's venture into the asset management realm.
The potential launch of Zerodha's first fund offer is imminent, as confirmed by Kamath. An asset management company typically introduces its proprietary mutual funds that can be distributed through various channels, including distributors and direct platforms. Zerodha, having served as a distributor of direct mutual funds so far, operated a platform named Coin for this purpose.
Notably, this move echoes a growing trend within the fintech sector. Sachin Bansal-backed Navi and rival platform Groww are examples of fintech firms venturing into the asset management sphere to broaden their financial services portfolios. Navi acquired Essel Mutual Fund to establish its own AMC, while Groww is also exploring an AMC venture through the potential acquisition of Indiabulls AMC.
