Altamount Capital's take on India's wealthy

Richa Karpe from multi-family office Altamount Capital discusses India's super-rich, succession planning issues and how philanthropy is evolving.

We talk to Richa Karpe at Mumbai-based wealth manager Altamount Capital Management, who is charged with helping Altamount’s ultra-high-net-worth clients develop their asset allocation strategy.

What is unique about the Altamount Capital offering?
The concept we follow is that of an independent family office which is purely an advisory business model. We are not aligned to any bank or brokerage house. The concept we follow is that of assets under supervision (AUS) and not assets under management (AUM). We look at the entire pie in totality and not just a piece of the family’s wealth. Our traditional services are across different asset classes including fixed income, equities, special situations and distressed assets. We also help our clients with succession planning, setting up trust structures, philanthropy, offshore concierge services, direct investment in asset classes such as Indian art and real estate, as well as direct and co-investing private equity opportunities.

We are committed to evaluating the best investment opportunities for our families. Our revenues are earned based on the fees clients pay, not from selling in-house products.

What is your client profile? How do clients mandate you?
We focus on the wealth needs of ultra-high-net-worth (UHNW) families with investible assets of at least Rs750 million ($17 million). Boston-based research firm Celent recently estimated there are 6,000 families in India with an investible surplus of Rs1.2 billion or more, and more than 20,000 families with between Rs400 million and Rs1.2 billion. Our clients are sourced primarily through the network of contacts we have within the organisation as well as client referrals.

Have succession issues come to the forefront for UHNW Indian families?
World over we have seen families and successive generations destroy wealth. This has been the outcome for a number of reasons: sibling rivalry; cannibalisation of businesses built by earlier generations; lack of a long-term view; and lack of unity among family members.

After the recent recession, which caused massive wealth destruction, legacy planning has become even more important. The current generation is keen to use wealth as a force of good in the world as well as for their families. For them, success is beyond money -- they want their families to remain cohesive and their children to lead fulfilling and meaningful lives by cultivating their potential and making a difference in society. Most importantly, they want their children to learn to value wealth.

These goals can be achieved through a professionally-managed succession planning process focused on passing-on values, wisdom, purpose and ethics; to help bring together financial professionals, tax specialists, attorneys and family members.

Is the concept of family offices well understood in India?
Single family offices are common in India but the concept of multi-family offices (MFO) is new. We were the first of its kind independent MFO in India. However, over the past couple of years a number of players have entered the market offering the MFO model. I’d note however that not all are independent outfits – some are a part of larger financial institutions.

What is the approach of UHNW Indians towards philanthropy?        
Promoter-led professional Indian companies now realise that allocating part of their net profits to ‘corporate social responsibility’ initiatives benefits both the community and shareholders. Wealthy families have been setting up charitable trusts to allocate resources from family members who may have identified causes in advance such as developing their ancestral village, setting up a primary school or even promoting computer literacy. This practice has been running across generations.

A recent method of channelling funds has been impact investing [a hybrid between philanthropy and private equity whereby investors seek investments which will generate social and environmental value as well as a return on capital]. Preliminary trends in India suggest that UHNW families are embracing this model due to its unique concept of pooling resources and earning very little returns however having a [positive] impact on social communities, environment or even an industry.

The other prominent engine has been the use of NGOs (non-governmental organisations, typically not-for-profit) which independently identify, evaluate and monitor projects that seek funding for various causes, such as providing sanitation or medical and healthcare. Each project goes through due-diligence before showcasing them via a catalogue to wealthy families.

Fostering positive economic, social and at times political change, philanthropy by India’s wealthy has taken the form of grants, loans or equity capital. Philanthropy still forms a low percentage of India’s GDP but it is gaining momentum, credibility and most importantly due acceptance among Indian UHNW families.

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