Kamath brothers-founded Zerodha applies for SEBI merchant banking licence, eyes investment banking entry

Zerodha Corporate Advisors Private Limited, a Zerodha group entity, has applied to the SEBI for a Category-I merchant banking licence, marking a planned move by the broking group into investment banking and issue-management services.

The application, which was filed in late April, is currently under review by the market regulator, according to SEBI’s latest merchant-banker registration application status update.

Zerodha said it had filed an application for a merchant banking Category-I licence with SEBI and would share more details about its business plans after receiving regulatory approval.

If granted, the licence will allow the entity to undertake full-service merchant-banking activities, including issue management, IPO-related assignments, underwriting and other corporate-finance advisory work, subject to Sebi regulations and client mandates.

The move comes as several firms are seeking to build or expand capital-markets advisory capabilities in India. SEBI’s May-end status update listed 13 merchant-banking applications under process, including applications from Zerodha Corporate Advisors, InCred Capital Financial Services, Societe Generale Securities India, Haitong Securities India and Capri Global Capital Markets.

A merchant-banking foray will put Zerodha in a segment that already includes large investment-banking and capital-markets firms such as Kotak Mahindra Capital, JM Financial, Axis Capital, ICICI Securities and others. However, Zerodha has not yet received the licence, and its specific focus areas in the business will be known only after regulatory approval.

The application is also part of Zerodha’s broader effort to build businesses adjacent to its core stockbroking operations.

Over the past few years, the group has expanded into asset management through Zerodha Fund House, lending through Zerodha Capital, startup and ecosystem investments through Rainmatter, and overseas-investing infrastructure through its GIFT City initiatives.

Zerodha has also added fixed-deposit investments on its Coin platform through a partnership model. The FD products are offered through Blostem and partner small finance banks, with Zerodha Broking acting as a distributor rather than as the bank or issuer of the deposits.

Zerodha has not disclosed further details of its merchant-banking plans, and the proposed business remains subject to SEBI approval.