Zerodha gets final nod for AMC licence from Sebi

Stock broking startup Zerodha has received the final approval from market regulator Securities and Exchange Board of India to launch its asset management business, chief executive Nithin Kamath announced on Friday.

It is launching the asset management company in partnership with Smallcase, which was incubated within Zerodha’s in-house corporate fund Rainmatter. In April, both Zerodha and Smallcase had announced that they would form a joint venture to launch the Zerodha AMC business.

While Zerodha is still bootstrapped, Smallcase is backed by the likes of Amazon, HDFC Bank and Peak XV Capital (formerly Sequoia India).



In a message posted on the X social media platform (previously Twitter), Kamath said there were two reasons that motivated Zerodha to launch an AMC.

The first was that even after so much growth over the last three years, there are only around 60-80 million unique equity investors.

The second was the need for the market to have simple products so that the next 10 million investors could enter into this space quickly. “They needed simple products they could understand, and mutual funds were a perfect instrument,” Kamath said.

The company also confirmed the appointment of Vishal Jain as the new CEO of its AMC business. Jain is a veteran manager of the exchange-traded fund industry and was at Nippon India Mutual Fund for five years before joining Zerodha.

The company could launch its first fund offer pretty soon, Kamath said.

An asset management company launches its own mutual funds, which can be sold through distributors or direct channels. Zerodha, all these years, has been a distributor of direct mutual funds. It ran a platform named Coin for this business.

Another fintech company that has set up its own AMC business is Sachin Bansal-promoted Navi. Navi acquired Essel Mutual Fund to get its licence. Groww, a competitor to Zerodha in the broking and mutual fund space, is also looking to set up an AMC business through the acquisition of Indiabulls AMC.

What started with broking has now expanded into a complete wealth management suite at Zerodha. The privately held company was founded by Nithin Kamath and his brother Nikhil Kamath in 2010.

ET had reported on April 11 that the Bengaluru-headquartered brokerage was expected to post revenue (including interest income from its own investments) of around Rs 5,956.8 crore and a net profit of Rs 2,513.6 crore in fiscal year 2023. These numbers were not audited.