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Groww joins Walmart-backed PhonePe, another major fintech startup which moved its domicile from Singapore to India in October 2022.
Several Indian startups with foreign domiciles across the US and Singapore are in various stages of flipping back to India, ET has been reporting. Fintechs like Pine Labs and Razorpay, along with quick-commerce firm Zepto, edtech Eruditus, ecommerce firms Meesho and Udaan are also planning to move their holding companies back to India
Industry executives said moving domicile back to India is linked to startups looking to gain from the rising valuations that domestic public markets offer technology ventures. Many of these startups had set up parent firms in the US or Singapore to raise capital from overseas investors quickly due to the regulations in place at the time.
For Groww, it is not clear how much tax the firm has had (or has to pay?) to pay yet. “Having an overseas entity didn’t make sense anymore and we have been profitable for the last three years so we didn’t raise any external capital for moving back as well,” a person aware of Groww’s move to India said.
Groww was part of the YCombinator 2018 winter batch and was domiciled in the US.
For fintechs, the move to reverse-flip holding companies here is also linked to the regulatory landscape. Financial regulators want fintech firms to be in India and have all their subsidiaries registered here.
Also read | More startups India-bound, map ‘reverse flip’
Homecoming and taxes
Founders in the middle of flipping holding companies to India have told ET that the tax payout – in India or abroad – is a significant cost, for which they need to account for.
Meesho, for example, is raising a new round and part of the proceeds will be used to account for the tax payout to move the parent company to India. Razorpay may have to spend $300 million in taxes to the US Internal Revenue Service (IRS), but its founder Harshil Mathur has said the company has accounted for the same already. Sources said it may opt to raise new capital too. The exact payout depends on multiple factors, including the valuation of the company. Razorpay was last valued at $7.5 billion while the same for SoftBank-backed Meesho is nearly $5 billion.
PhonePe had reportedly paid Rs 8,000 crore in taxes to the Indian government after shifting its domicile.
Groww is one of the largest fintech startups in the country currently. Backed by the likes of Peak XV Partners, Tiger Global and Ribbit Capital, the Bengaluru-based startup was last valued at $3 billion in 2021.
