Financial services company Bajaj Finserv Ltd, the newly incorporated subsidiary of Bajaj Holdings and Investment Ltd, is planning to enter the country’s rapidly growing asset management business this year, and firming up plans to start a distribution firm for its products.
The financial products would include insurance, auto and consumer finance, and asset management services, Bajaj Fenserv’s managing director Sanjiv Bajaj told Mint in his first interview to the media after taking over the new assignment.
Bajaj Finserv Ltd managing director Sanjiv Bajaj
The company is planning to set up a distribution firm that will be a one-stop shop for all products that the company will offer.
“We have a variety of options before us including setting up retail outlets or a web site and we expect to finalize details by December this year,” Bajaj said but declined to discus the quantum of investment in the proposed venture.
Two-wheeler maker Bajaj Auto Ltd, or BAL, has recently recast the firm and created two companies to focus on the auto business and the business of wind energy generation, insurance and consumer finance. Subsequently, the erstwhile BAL has been named Bajaj Holdings and Investment Ltd. It holds 30% in both subsidiaries and focuses on investments and new business opportunities..
“This is the right time to get into the asset management business. India’s young population is earning like never before and want investment opportunities other than the low-yield fixed of banks…,” said Bajaj, who till recently steered international business at BAL.
“In next five years, 50-60% of our business topline will come from asset management, lending and distribution business. The rest will come from insurance,” Bajaj said.
Bajaj Finserv is also looking for a strategic overseas partner for its asset management business. “We intend to freeze the details of the venture including any possible overseas partner by September this year,” Bajaj said.
The company will join global and domestic firms that include AIG Global Investment Group, Mirae Asset Global Investment Management India Pvt. Ltd, JPMorgan Chase and Co., the Essar Group, and Bharti AXA Life Insurance India, who want a share of the country’s lucrative asset management business that is expected to grow at 30% for the next four years, according to consultancy firm Mckinsey and Co. data.
At present, there are 33 asset management firms operating in India, managing Rs5.27 trillion worth of assets till 31 March, says the data.
The company is also recasting operations of its auto finance arm, Bajaj Auto Finance Ltd, and repositioning it as a full-service non-banking finance company offering products that will include mortgages, loans against shares as well as loans for small businesses.
“We set up a small 70-people call centre last year which has been cross-selling smallpersonal loans of between Rs400,000 and Rs14,00,000. We have managed to cross-sell 10,000 loans in the last year alone, and by the end of the current financial year,we expect this alone to be a Rs400 crore business,” Bajaj said.
The auto finance company has some 4.5 million customers and an asset base of Rs2,700 crore. By July it will start selling loans against property and shares. “Every four months we intend to launch a new product in this space and we plan to take this to tier 1 and tier 2 cities,” said Bajaj.
The company currently operates from 450 locations.