Discount brokerage Zerodha has applied for a merchant banking licence with the Securities and Exchange Board of India. The application, filed on April 27, is currently under review, according to SEBI data.
Confirming the move, a Zerodha spokesperson said, “We have filed an application for the merchant banking (Category 1) licence with SEBI.” The spokesperson added, “We'll be able to share more about our business plans once we receive the licence.”
A Category 1 merchant banker licence will allow Zerodha to expand beyond broking into a wider suite of capital market services. These include managing initial public offerings, follow-on offers, and other fundraising transactions. The firm will also be able to act as a book-running lead manager, file draft red herring prospectuses, conduct due diligence, manage pricing and coordinate investor roadshows.
Beyond IPO management, merchant bankers play a central role in corporate finance advisory. They can advise on mergers and acquisitions, open offers, buybacks and structured capital raising transactions. The business is fee-driven, with firms earning from IPO mandates, deal advisory and retainers, often running into tens to hundreds of crores for large transactions.
However, the licence comes with strict regulatory requirements. Entities must meet minimum net worth thresholds, maintain strong compliance systems, and ensure high standards of disclosure and due diligence.
Zerodha's application is part of a broader pipeline. As of May-end, 13 firms have applied for merchant banking licences with SEBI and are awaiting approval.
These include InCred Capital, Societe Generale Securities India, Neo Wealth Management, Stepone Capital Advisors and Haitong Securities India, signalling rising interest in the investment banking space amid a revival in primary market activity.
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