Groww’s parent firm, Billionbrains Garage Ventures, is gearing up to raise funds through a high-profile IPO approved by SEBI, with expectations of being one of India’s biggest fintech offerings.
The Bengaluru-based company, incorporated in January 2018, has received the green signal from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO), reported The Financial Express.
While the final launch timeline has not been confirmed, market watchers expect the issue to raise between $700 million and $1 billion, valuing Groww at around $7–8 billion.
IPO Structure and Use of Proceeds
As per the Draft Red Herring Prospectus (DRHP), the Groww IPO will be a 100 per cent book-built issue, featuring both a fresh issue and an Offer for Sale (OFS).
The fresh issue will comprise 10,600 crore shares. The OFS will involve the sale of 57.42 crore shares.
Up to 35 per cent of the proceeds will be allocated for inorganic growth via acquisitions and general corporate purposes, with neither sub-category exceeding 25 per cent of gross proceeds.
Leading global and domestic investment banks, including Kotak Mahindra Capital Company, JP Morgan India, Citigroup Global Markets India, Axis Capital, and Motilal Oswal Investment Advisors, are serving as book-running lead managers. The registrar of the issue is MUFG Intime India (formerly Link Intime India).
Promoters and Selling Shareholders
The company’s four co-founders and promoters, Lalit Keshre, Harsh Jain, Ishan Bansal, and Neeraj Singh, will each sell 10 lakh equity shares in the offering.
Among the key stakeholders offloading their stake in the upcoming issue are Peak XV Partners Investments VI-1, which is looking to sell up to 15.83 crore equity shares, followed by YC Holdings II, LLC with plans to divest up to 10.55 crore equity shares. Ribbit Capital V, L.P. will offload as many as 6.57 crore shares, while Internet Fund VI Pte. Ltd. is set to sell up to 6.48 crore equity shares. In addition, GW-E Ribbit Opportunity V, LLC will pare its holding by up to 5.25 crore shares.
Key Risks for Investors
Investors must weigh several risks linked to the Groww IPO.
Working capital pressure: During periods of high customer activity or market volatility, settlement delays and higher margin requirements could strain liquidity.
FY24 loss: Groww reported a Rs 805.45 crore loss in FY24, largely due to a one-time performance-linked payout of Rs 778.6 crore to senior management, which spiked employee benefit expenses.
Long-term incentive plan: Initially scheduled to cost Rs 106.17 crore in FY24 and Rs 159.25 crore in Q1 FY25, the incentive scheme for whole-time directors was later cancelled.
Technical glitches: The platform has faced outages, raising concerns about operational reliability.
Macroeconomic risks: User activity in investing, saving, and spending remains highly dependent on market conditions, global headwinds, and geopolitical developments.
