Domestic Indian investment bank Ambit Capital launched a wealth management service earlier this year. We talk to Sutapa Banerjee, the chief executive officer, about how she plans to grow the business in a competitive marketplace.
What are the assets under management of the wealth management business of Ambit Capital? What is the typical client profile?
Ambit launched its private wealth business in early April this year. In four months we have moved rapidly to Rs4.5 billion ($97 million) of AUM across 50 families. Ours is a niche business model where we offer end-to-end services to ultra-high-net-worth individuals (HNWI) and companies, almost always on an invitation basis.
We have a three-way approach to private wealth: management, protection and transmission. An optimal investment strategy help in managing wealth, but the wealth is protected through other means such as insurance and trusts. Finally, unencumbered wealth is transferred to the next generation through proper estate planning -- the creation of trusts and wills.
Our clients are mainly owners/founders of small and mid-sized businesses with an investible surplus in excess of at least $5 million. We cater to [Indian] resident clients as well as non-resident Indians [NRIs] for their onshore wallet. We are aiming to grow AUM to Rs50 billion to Rs60 billion over the next four to five years but from only 400 client groups. This will ensure that we maintain the high quality of our advisory services for our clients.
How do you differentiate yourselves from the wealth management offerings of both large foreign players and small, local players?
Though the wealth management industry [in India] has a number of players, both local and international, it is still in a relatively nascent stage. Being serviced by just one [wealth manager] is not something that this market is exposed to, or satisfied with. So even if the individual or entity that we are targeting is engaged with one or two entities, I believe we should be able to demonstrate value as the second or third [service] provider.
Second, all members of our team come with significant experience from their previous organisations and hence have the ability to move a significant portion of client portfolios with them. Once the client signs up, it’s a function of our advisory and proposition that determines how deeply we penetrate the client wallets. Our strong performance in garnering AUM in a very short period [of time] bears evidence of this.
Third, Ambit has a niche presence in the corporate finance area, particularly in mergers and acquisitions. The legacy of this is extremely important. So, when the investment bank raises money for an HNWI or company we step in and manage that money. There are also corporate finance deals which come to us and we showcase some of these to our clients as investment opportunities. Very few multinational entities would be able to source such deals.
Fourth, large industrial families require a ‘family office’ which means there are experienced and qualified people who manage very large corpuses for them in a transparent manner for a fee charged on the money managed. We offer these services as well.
Has the recent credit crisis made your clients wary of certain investment choices? Which ones and why?
The recent crisis has made all clients in the industry as a whole more cautious and more demanding of information across all classes of investments. Clients want to be informed of the underlying investments for all asset classes, including fixed income. They are keen to understand clearly the associated risk in detail for each investment category.
How is the wealth management business in India changing? How are the needs and demands of the clients changing?
The wealth management industry in India is only about a decade old and hence still relatively nascent compared to most parts of Asia and the rest of the world. Regulators have started to frame the policies necessary to turn it into a stable, efficient and properly regulated industry. Ambit private wealth has already adopted such policies, practices and processes with defined risk management and financial planning platforms that are in line with the framework that the regulators are moving towards.
The regulatory framework in India is encouraging a move towards charges for advisory services to be levied by wealth advisers on their clients, and away from manufacturers of products compensating wealth advisers for distributing their products. In a competitive environment where the client is evaluating the fees being charged for the services he is receiving from the adviser, this makes the quality of the advisory services critical.
