Online brokerage platform Zerodha is preparing to enter the investment banking business and has applied to the Securities and Exchange Board of India (Sebi) for a Category I merchant banking licence, according to reports.
The proposed move would allow the company to broaden its financial services footprint amid a sustained boom in India's IPO market.
The application has reportedly been filed through Zerodha Corporate Advisors Private Limited, a group entity, and was submitted to Sebi in April. It is currently under the market regulator's review.
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Responding to queries, Zerodha confirmed that it has applied for a Category I merchant banking license but said that it would share more details about this after receiving regulatory approval.
"We have filed an application for the merchant banking (Category 1) licence with Sebi. We’ll be able to share more about our business plans once we receive the licence," a Zerodha spokesperson said in a response to the query.
The development comes as India's investment banking industry continues to witness heightened activity, driven by a strong pipeline of IPOs, follow-on offerings and other capital market transactions. Several financial services firms have expanded their merchant banking operations to tap growing demand from companies looking to raise capital.
The other several players who are currently dominating the space include names such as JM Financial, Kotak Mahindra Capital, Axis Capital and ICICI Securities.
Founded by Nithin Kamath and Nikhil Kamath, Zerodha has gradually broadened its financial services offerings beyond stock broking. The company already provides products across mutual funds, bonds, lending and asset management, and an investment banking business would further strengthen its position as a diversified financial services platform.
Zerodha received in-principle approval to launch its mutual fund business in September 2021. It partnered with wealth management company Smallcase for its mutual fund business.
In April this year, Zerodha launched fixed deposit (FD) investments on its Coin platform, marking another step in its push to broaden beyond equities and mutual funds into more traditional savings products. The move allowed users to invest in fixed deposits across multiple banks through a single interface, addressing a long-standing friction in retail investing where deposits are spread across institutions and tracking becomes cumbersome.
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The proposed foray also aligns with Zerodha's broader strategy of expanding into adjacent financial services businesses while leveraging its large retail investor base and technology-driven platform. However, the investment banking business can commence only after Sebi grants the required merchant banking registration.
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