Zerodha Expands into Investment Banking

Zerodha, a bootstrapped stock broking platform, is preparing to enter the investment banking sector. This move signifies its expansion beyond traditional broking and wealth management services. According to a report from Business Standard, the Bengaluru-based firm has submitted an application for a Category-I merchant banking licence to the Securities and Exchange Board of India (SEBI). The application was filed in April and is currently pending regulatory approval.

Details on the Application

A spokesperson from Zerodha confirmed to Startup Superb that the company has submitted an application for the merchant banking (Category I) licence with SEBI. They mentioned that more details about their business strategy would be shared once the licence is obtained.

Opportunities with the Licence

Once the licence is approved, Zerodha will have the capability to manage initial public offerings (IPOs), offer advice to companies on capital raising, and provide other merchant banking services. This strategic move aligns with the current surge in India’s IPO market, where numerous startups and emerging companies are preparing to go public in the coming years.

Building a Comprehensive Capital Markets Business

The investment banking licence could enable Zerodha to create a full-stack capital markets business. Over recent years, the company has diversified its operations from stock broking into mutual funds, asset management, lending, startup investments through Rainmatter, and international investing. Entering the investment banking realm would further solidify its position in the financial services ecosystem.

Increased Competition in Merchant Banking

The approval of this licence may also heighten competition within the merchant banking sector, which is largely dominated by established firms such as JM Financial, Kotak Mahindra Capital, Axis Capital, and ICICI Securities. With numerous venture-backed companies expected to seek public listings in the near future, Zerodha might emerge as a significant player in this space, vying for these mandates. Although the company has confirmed its application for the licence, it has yet to reveal any detailed business plans.

Recent Developments

Recently, Zerodha has introduced fixed deposits (FDs) on its Coin platform. This feature allows users to invest in FD schemes offered by partner banks and monitor their investments through a single interface. During the fiscal year 2025, the company reported a revenue of Rs 8,847 crore and profits of Rs 4,237 crore.