Zerodha's AMC 'Zerodha Fund House' in talks to raise up to $100 million in funding: Report

Zerodha's asset management company (AMC) 'Zerodha Fund House' is reportedly in talks with several investors to raise up to $100 million in external funding. 

Zerodha Fund House is a joint venture between stock broking giant Zerodha and investment platform Smallcase. Last year, Zerodha received approval from SEBI to start its asset management venture.

While there is no confirmation from the company regarding the funding, the move marks a significant shift for the Zerodha Group, which has been self-funded since its inception in 2010.

According to an Entrackr report, The discussions are still in the preliminary stages and could take months to finalize, with the potential to bolster Zerodha's position in the highly competitive stock broking and asset management market.

Expanding mutual fund offerings

The funding report comes as Zerodha aims to expand its mutual fund offerings. Three schemes were launched in October last year. 

The expansion is part of Zerodha's strategy to diversify its investment products and strengthen its asset management company (AMC), Zerodha Fund House, amidst growing competition from peers like Groww and the entry of new players such as Reliance-backed Jio BlackRock into the Indian asset management market.

Strategic joint ventures and product launches 

Zerodha Fund House, which is managed by Zerodha Assets Management Private Limited, is a strategic collaboration between Zerodha, which owns 70% of the share capital, and Smallcase.

The company has launched two index funds and a Liquid and Gold ETF, aiming to offer transparent and affordable mutual fund options to investors. The development is part of Zerodha's commitment to increasing market participation and offering diverse wealth management solutions alongside its core stock broking business.

The competitive edge

The stock broking space in India has become increasingly competitive, with major players like Zerodha, Groww, AngelOne, and Upstox vying for market share. Zerodha's move to raise external funding and expand its mutual fund offerings is a strategic effort to maintain its competitive edge, especially as Groww recently surpassed Zerodha in terms of users. 

The competition is further intensified by the entry of new players and the launch of mutual fund schemes by other companies, highlighting the dynamic nature of India's asset management industry.