Godrej Investments, the holding company for the financial services businesses of the Godrej Industries Group, launched its wealth management arm, becoming the latest conglomerate to try and tap India’s burgeoning affluent population.
The group will carry out this business through Godrej Wealth, a subsidiary of Godrej Investments, sitting alongside subsidiary Godrej Capital, which houses the lending business.
Kunal Karnani, who has been with Godrej Capital since inception as its chief financial officer after stints at Shriram Housing Finance and Paytm, has been elevated as chief executive officer of the wealth management business. He will report to Manish Shah, managing director and CEO of Godrej Capital.
The group has also set itself an ambitious target to reach ₹1 trillion in wealth management assets by 2031. The lending business, which has a book of about ₹30,000 crore, also plans to reach ₹1 trillion in loans during the same time.
This timeline also coincides with Godrej Industries’ plan to list the financial services business, one that chairperson designate Pirojsha Godrej said will be the fastest-growing among all its businesses.
Mint reported in January that Godrej Industries Group is restructuring its financial services businesses to prepare for expansion into new segments, including wealth management.
The company will target customers with investable funds of over ₹2 crore and is expected to compete with Jio Blackrock, 360 ONE Wealth and an array of banks—Indian and foreign—that want a piece of this pie. The financial services businesses of conglomerates like Tata and Bajaj also have a presence in the wealth space.
Wealth growth
Consulting firm BCG estimates that emerging markets will add $12 trillion of financial wealth, accounting for about 10% of global wealth growth, between now and the end of the decade. India, it said, will add more than $2 trillion in total wealth by 2030.
The crowd in the wealth management space does not deter Pirojsha, the scion of the group. “We agree that the space is cluttered,” said Godrej, adding that many participants' incentives are not actually well-aligned with their customers' goals.
He said that the banking sector is a source of wealth advice for many customers and has strong requirements for deposits and a bank will therefore want to advise customers to keep a lot of their capital in deposits.
“That may or may not be the best strategy for the customer, based on their own financial goals and ambitions. So, in the space that we are targeting, which is not the ultra-high net worth individuals, but people with investable wealth, at that level, the large competition we see is from banks on the one hand, where some of these incentives are misaligned,” Godrej said.
Product portfolio
To start with, Godrej Wealth will provide third-party products to customers while it prepares its own suite. It will also have an in-house asset management company.
“As we start, most of those solutions are made or manufactured by players other than ourselves. Over the coming quarters, some of these we will make ourselves, whether it's portfolio management services or a mutual fund through an asset management company,” said Shah, the head of Godrej Capital.
Shah said they see little value getting into certain areas of financial services such as transactional businesses like payments.
“All of us are consumers of payment companies and they do a fantastic job. We don't think there is a problem that we need to come in and solve, and we certainly don't think we can do it better than the others,” Shah said.