SBI MF IPO: Can Zerodha, Groww and other digital-first funds threaten India’s largest AMC in $1 trillion race?

The rise of digital-first investment platforms such as Zerodha and Groww is changing the way Indians buy mutual funds, but SBI Funds Management believes bank-led asset managers still have a strong edge in scale, trust and distribution. India's asset management companies manage nearly $1 trillion, ( Rs 80 lakh crore) in assets through various schemes.

SBI Funds Management, the asset manager of SBI Mutual Fund, has flagged in its red herring prospectus that India's mutual fund industry is becoming more competitive as niche, digital-first and specialised fund houses gain ground. The company said the market share of the top 10 asset management companies fell from 82.8% in March 2021 to 76.3% in March 2026, showing that smaller and newer players are taking away some share from established names.

What's leading to the shift?

The shift comes at a time when more investors are buying mutual funds directly through apps, discount brokers and online platforms. Zerodha's Coin platform says it has nearly Rs 1.6 lakh crore in direct mutual fund assets. Groww has said more than 1 crore investors have built over Rs 1.9 lakh crore of mutual fund investments on its platform. Both platforms have built their mutual fund businesses around ease of use, direct plans and low-cost investing.

This is the pressure point for traditional AMCs. Digital-first platforms are not always trying to win by branch networks or bank relationships. They are winning by making investing simple, mobile-first and cheaper for do-it-yourself investors.


SBI Funds Management has acknowledged the change. The company said smaller AMCs have gained traction through differentiated strategies, digital penetration and product innovation. The share of small AMCs has expanded to 29.3%, helped by rising investor acceptance of newer strategies, improved digital distribution and a more open market for fund selection.

SBI MF IPO: Scale still matters

According to the RHP, the top 10 AMCs continue to manage more than three-fourths of industry assets. More importantly, bank-sponsored AMCs continue to hold a dominant position because of parentage, distribution reach, customer trust and cross-selling ability.

Also Read: SBI Funds Management IPO: GMP and other key details investors should know about Rs 11,693 crore offer

The top five bank-led AMCs had a market share of 52.1% in FY26. This is lower than the 54.7% seen in March 2021, but still represents majority control of the industry. The top three bank-led AMCs have held a stable market share of around 40-41% between FY21 and FY26.

For SBI Mutual Fund, that bank-led advantage is central to the story. The AMC benefits from the SBI brand, one of the largest banking networks in the country and access to customers across metro cities, smaller towns and rural India. That reach is difficult for purely digital platforms to replicate, especially among first-time investors who may still prefer an institution they recognise.

About SBI MF

SBI Funds Management’s business is mainly built around management fees from mutual fund schemes, though it also offers portfolio management services, advisory services and alternative investment funds. Its next phase of growth will depend on expanding retail reach in Tier-2, Tier-3 and rural markets through SIPs and the SBI network.

The company is also trying to respond to the digital shift. It plans to improve digital platforms with AI tools, smoother onboarding and better analytics for distributors. It also wants to grow passive products, ETFs, PMS, AIFs and specialised investment funds. Institutional business, NRI products, GIFT City and global offerings are also part of its growth plan.

The larger question is whether digital-first platforms are a direct threat to SBI Mutual Fund or simply a sign that the industry is expanding. For now, the evidence points to both.

Analysts say they are a threat because they can influence investor behaviour. A young investor starting with Groww or Zerodha may not choose a fund because it comes from a bank-led AMC. They may choose based on performance, cost, app experience, content or recommendation tools. This weakens the old distribution advantage.

But they are also helping grow the market. Apps have made mutual funds easier to access, especially for SIP investors and first-time equity participants. The industry’s growth is also coming from new investors entering the market.

Rising competition

Digital platforms are pushing the industry towards lower costs, better user experience and more transparency. Bank-led AMCs have the advantage of trust and reach, but they will need to keep improving digital execution to hold younger investors.

Swastika Investmart said the SBI MF, being the largest asset management company in India by mutual fund QAAUM, benefits from scale and operating leverage. "It also has strong SIP franchise with high investor retention and
a large base of long-term systematic investors, backed by SBI’s distribution network and Amundi’s global asset management expertise," the broker said in a note.

SBI Funds Management will launch its offer on July 14 and investors can bid for the shares till July 16. In the IPO, SBI will sell up to 12.83 shares shares through the offer, while the rest will be offloaded by Amundi India Holding.

The shares are attracting decent demand in the grey market as trends suggest the stock could list at around Rs 644, implying a premium of nearly 13% over its issue price of Rs 574 per share. The offering is set to be the largest IPO of 2026 so far, raising nearly Rs 11,693 crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)