Discount brokerage firm Zerodha on Wednesday announced that it has joined hands with fintech firm smallcase to start an asset management company. “I’m super happy to announce that @smallcaseHQ will help @zerodhaonline build simple low-cost passive mutual fund products for India,” tweeted Zerodha co-founder Nithin Kamath.
“While awaiting the final approval of our AMC (mutual fund), we asked if we should build it ourselves or collaborate.
“Given the 6+ years of experience that @smallcaseHQ has in building investment products, it made perfect sense to create a joint venture (JV) to build the AMC,” he added.
When contacted, a Zerodha spokesperson said the company has only received an approval for the joint venture, and would share more details only when the final approval for the AMC is granted.
Zerodha had recorded an 82% surge in revenue from operations to Rs 4,964 crore in FY22, compared to Rs 2,729 crore in FY21. Similarly, its profits jumped 86.6% to Rs 2,094 crore in FY22, against Rs 1,122 crore in FY21.
smallcase was founded in July 2016 by IIT graduates Vasanth Kamath, Anugrah Shrivastava, and Rohan Gupta to provide new investors with low-cost and transparent investment products. Its key investors include Sequoia Capital, Blume Ventures, HDFC Bank, Amazon, and DSP.
“Very excited for @smallcaseHQ to partner with @zerodhaonline to help introduce a new generation of investors to mutual funds.
“The upcoming AMC will be a joint venture between Zerodha & smallcase and will use learnings & shared values from both cos to build an enduring fund house,” tweeted smallcase co-founder Vasanth Kamath.
He added that in the last six years, smallcase had helped millions of demat account holders build a healthy long-term portfolio, and there is immense potential to extend the same to MF to bring in a new segment of investors.
The investment platform has a user base of over 6 million and transactions worth over `35,000 crore on the platform, according to the company profile.
The platform works on direct indexing and model portfolios, offering its customers the option of creating or investing in diversified and long-term portfolios of stocks and ETFs. smallcase has partnered brokerages like Zerodha, Groww, Kotak Securities, HDFC Securities, 5paisa, Edelweiss, Axis Securities, and IIFL Securities to build an ecosystem of simplified stock portfolios for investors.
The firm calls itself ‘millennial-focused’, and seeks to develop products to help create portfolios that are simple to understand for new investors. smallcase has a headcount of over 300 across its product, engineering, business, and growth verticals, as well as with partnerships with more than 350 financial institutions.
This development comes on the heels of Bajaj Finserv MF filing draft documents with the regulator for five schemes.
The AMC had received an approval for starting its MF operations last month. Back in February, broking firm AngelOne, too, had received its approval for launching MF operations.