Financial services industry veterans Gopal Srinivasan and Narayan Seshadri have acquired majority stake in Bengaluru-based wealth management company International Money Matters Pvt. Ltd (IMMPL).
The wealth management company is focusing on building a technology platform to scale up its service offerings to clients, while also reducing the costs of the service, said Srinivasan, chairman and managing director, TVS Capital Funds.
The current investment is less than Rs10 crore, but over time, as the company scales up, the duo plans to invest around Rs25-30 crore in the business, he said.
Srinivasan and Seshadri have invested in the company in their personal capacity. Seshadri is a former head of Andersen Business Consulting in India.
“Wealth is a growing segment. Traditional models of wealth management are being challenged by lower fees. I have always thought that fintech can be transformative for this business," said Srinivasan.
Srinivasan has earlier invested in other fintech companies such as payment services firm Mswipe and EzeTap. Seshadri recently joined hands with other financial services veterans Sanjay Nayar and Vikram Sud to start a non-banking financial company named Epimoney Pvt. Ltd after purchasing a technology-based financing platform. Nayar is chief executive of KKR India, the local arm of global private equity firm KKR and Co., while Sud is a former regional operations and technology head at Citigroup Inc.
IMMPL, founded by Lovaii Navlakhi in 2001 today has over 500 active customers with Rs850 crore in assets under management (AUM). Navlakhi is a certified financial planner with over 30 years of experience in the wealth management industry.
According to Srinivasan, IMMPL will scale up its business by reaching out to other markets beyond Bengaluru.
“Our idea is to find similar opportunities in South and West India and make similar acquisitions to build out fintech driven platform. Pune, Chennai, Hyderabad, Baroda, Coimbatore, Vijaywada are all ideal markets, where the professional community having larger investable financial assets is growing," said Srinivasan.
The company will also migrate to larger ticket sizes, targeting clients with Rs1-10 crore of investible assets.
Over time, IMMPL plans to grow to 1,000-2,000 clients with AUM of Rs10,000 crore to Rs15,000 crore, said Srinivasan.
According to Srinivasan, the duo decided to back IMMPL, given its focus on a fee-driven business model and an organization culture focused on customer retention and satisfaction.
“What is missing in the wealth management business today is customer satisfaction and retention. You can build up AUM, (assets under management) you can distribute several products, but having a strong culture that focuses on customer satisfaction and retention is difficult to find," he said, adding that wealth management is a pure culture business and IMMPL has built a strong customer-focused culture.
The fact that more than 60% of IMMPL’s clients pay fees for the services is another differentiating factor of the company, he said.
“A client fee payment model rather than a product distribution fee model, we believe is the right way to build a sustainable wealth business, because then there is no misalignment between company and clients," said Srinivasan.
Fintech is emerging as the next hot bet for early-stage investors. So far in 2016, several fintech focused companies such as Fisdom, LoanCircle, Finance Buddha and GyanDhan have raised funds from angel investors, data from Venture Intelligence shows.