Mumbai: Thomas L. Kalaris, chief executive of Barclays Wealth, met at least six iconic business families in Mumbai on Tuesday, canvassing for business for the Indian arm of his wealth management business.
Besides these families, which Kalaris declined to name, the other segment targeted by Barclays Wealth in India is the promoters of mid-market corporations.
According to Satya Narayan Bansal, the company’s chief executive in India, there are at least 6,000 of them in India and many are not listed on bourses. In the past eight months, Bansal and his team have made presentations to 100 such promoters, wooing their wealth for management.
Investment drive: Barclays Wealth chief executive officer Thomas L. Kalaris says India is the No. 1 focus in Asia for the company. Daniel Acker / Bloomberg
“When we started meeting a lot of these promoters, we found that there is a huge amount of surplus available with them,” Bansal said.
However, getting the mandate is no cakewalk as personal and corporate wealth are quite fungible, particularly for those companies that are 100% owned by the promoter. “The fungibility issue makes it slightly complex because you’ve to take care of the business side and personal side when you look at the investment in totality,” Bansal said.
Bansal was the first employee of Barlcays Wealth, hired about 18 months ago. Today, it has 100 employees in five locations, even as another domestic arm of Barclays Bank Plc., into retail lending and credit cards, has slashed jobs by the dozens in the country.
Kalaris expects people growth at his division to be 20% a year for the next five years. “In the wealth management business, we’ve definitely been a winner, and we intend to press that winning by further investing,” he said. “This (India) is our No. 1 focus in Asia. The market here is fragmented and we see a chance to take the business and continue to grow it in terms of technology, people and locations over the next five years.”
According to the World Wealth Report 2008, brought out by Merrill Lynch and Co. Inc. and Capgemini India led the world in population growth of high net-worth individuals (HNIs) in 2007, rocketing ahead 22.7% and exceeding gains of 20.5% in 2006.
The number of Indian HNIs, whom the report classifies as those with at least $1 million (Rs4.76 crore) in financial assets, stood at 123,000. This number would have come down substantially since equity markets had a bad year in 2008, with India’s benchmark equity index dropping over 52%. The report for 2009, which surveyed results for 2008, will be released by the end of this month.
According to a report by Boston, US-based financial research and consultancy firm Celent, India is a happy hunting ground for wealth managers with the number of their potential clients and size of manageable wealth expected to grow four times through 2012.
The wealth management market will have a target size of 42 million households by 2012, as against just about 13 million in 2007, according to the report titled Overview of the Wealth Management Market in India.
Kalaris believes his firm is well-positioned to capitalize on this, as it has been growing its business and market share. “It’s true to say that the assets are more conservatively invested than over a year or two ago,” Kalaris said, but that risk appetite is slowly returning.
According to him, if Rs100 was the pool of assets in risk capital in March 2008, all that shifted to cash or non-risk assets by the end of the year. Now 15% of the corpus has swung back to risk.
“What will happen over the course of the next year is that we’ll see the rest of the 85% slowly moving back into risk assets such as hedge funds, equity and private equity. But it’s still a long way to go,” he said.
In India, Barclays Wealth is also open to acquisitions, though the preferred growth mode is building organically, Kalaris said.
Apart from some of the iconic business families and promoters, a third segment that Barclays Wealth is targeting is high-end salaried professionals. “They may not have a huge amount of money at the start, but we can see that they are progressing very well in their careers; there are a lot of stock options that are unmonetized at the moment, ” Bansal said.
Neither he nor Kalaris talked about specific clients, but going by Barclays Wealth’s experience of eight months, Mumbai has the maximum wealth, followed by Delhi.
Kolkata ranks lower in terms of wealth pool but business families there have more surplus to invest as they don’t need much resources for expansion.