Working on many strategies to grow AIF biz: JM Financial
Wealth management and alternative investment industries are seeing strong traction in recent years with a growing number of rich Indians looking for more sophisticated advice and investment opportunities.
Wealth management and alternative investment industries are seeing strong traction in recent years with a growing number of rich Indians looking for more sophisticated advice and investment opportunities.
In an interview, Anuj Kapoor, MD & CEO, private wealth group and venture capital funds platform at JM Financial, said the financial services group is planning to ramp up its wealth and alternative investments businesses to exploit growing interest in these areas with the launch of several new products for high net worth individuals, family offices and institutional investors. Edited excerpts:
Can you tell us about your strategy to grow the private wealth business? What growth targets have you set for yourself?
Platform, people and technology are going to be our key focus areas while growing our private wealth business as we deliver value-driven solutions to our clients. JM Financial has a vast network across the country and we are integrating resources to provide synergistic benefits of the franchise network to our clients. We are focusing on deeper coverage across the regions through a hub and spoke model and also building our team strength.
Growth will also come from organic and inorganic partnerships and collaborations with domain experts which will cover every aspect of assistance our clients may need for their families and businesses.
We continue to enhance our products platform to innovate bespoke solutions for our clients in India. We are also extremely focused on offering our clients suitable global investment opportunities and help them navigate the complex multi- jurisdiction regulatory framework. Digitizing and simplifying on-boarding experience, access and documenting solutions is also a key growth enabler for us. We are confident of beating growth in the private wealth industry in India by a very healthy margin.
Given that JM Financial has been a latecomer to the AIF space, how do you plan to expand this business in the next 3-5 years?
We have been selective about the construct of our product offerings and the timing of the launch of those products. We believe in developing products that are unique while playing to our strengths and staying thematic to the market environment. At no stage, do we want to launch products which don’t qualify on these criteria. In the AIF space, our distressed assets fund and private equity funds are performing extremely well. We believe there are a lot of attractive opportunities in the credit space.
Given the global macro environment and rising interest rates, debt should play out well as an asset class for the next couple of years. Therefore, we have recently launched our performing credit fund to finance companies in situations involving acquisitions, partner buyouts, rights issues, etc. This also plays to our strengths as JM Financial has a strong track record and long legacy in the credit business. We’ll be launching a Dollar Bond fund in Singapore for offshore/LRS clients where the underlying would be Indian firms who have issued debt in the offshore markets. In addition, we are working on various strategies across venture debt, venture equity, pre-IPO, REITs/InvITs and techno-funda listed equity strategy in an AIF/PMS format. We will time the launch of these strategies based on the strict criteria we apply for determining the most optimal solutions for our clients.
Will you build your AIF business largely on the back of HNI and Family Office wealth or are you also looking to bring in institutional investors? How comfortable have domestic institutions become with AIF products?
The objective is to have a mix of the two (Institutional and UHNIs/Family Office). Domestic institutional investors are fairly comfortable with the AIF structure, especially category 1 and 2 AIFs. They have been one of the largest investors in such funds. But this pool of capital should expand in the coming years. We will continue to raise capital through our strong relationships with UHNIs and family offices. In addition, we will evaluate raising foreign capital through institutions and individuals. Given our strong brand proposition and legacy of the JM Financial franchise, we believe we would emerge as a partner of choice for foreign institutional investors as we look to scale up our alternative assets platform through AIFs.
Given the global macro challenges, from covid to Ukraine, how has the allocation to alternatives evolved in the last couple of years?
The uncertain and changing times have highlighted the need for alternate investment avenues with lower correlation and volatility to public markets. Investors are looking at such investment options to diversify their portfolio and optimize the overall return. The emergence of vehicles like Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trust (InvITs), etc have broadened the investor base for alternate assets.
For instance, the AIF space has witnessed a sharp growth of more than 50% CAGR in the past five years. We believe, depending on investors’ risk profile and various other parameters, the allocation to alternate assets can vary from 10% to 35% of the overall portfolio. Many sophisticated investors have clearly defined private market investment strategies wherein the idea is to build position in emerging themes/sectors or niche areas by investing directly or via private capital funds. Given the current interest rate regime and the outlook of equity markets, debt could be a very interesting play for the next couple of years. Investors are also more focused on value as compared to growth in the current volatile market environment.
What role will technology play in growing the wealth business?
India, being an emerging economy, has seen an increase in the number of affluent individuals looking for investment opportunities as per capita income has risen. Because of the growth in digital adoption, the wealth management firms can now access a broader range of the population and utilize data analytics tools to provide customized investment management and advisory services. As technology evolves, the services will become more customized, user-friendly, cost efficient and data driven, thereby improving the overall experience of an investor and wealth manager. Our strategy is to grow banking on a phygital model, offering best-in-class digital capabilities to our clients, supported by a strong physical network to provide customized solutions in the most efficient and professional manner.
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
MoreLess
First Published:22 Feb 2023, 10:43 PM IST
- Top Gainers
- Top Losers
- 52 Week High