While wealth in India has traditionally accumulated around Mumbai and Delhi, a rising middle class means more wealth is being created outside the major cities, providing a new challenge for those looking to tap this growing pool of potential clients.
360 ONE Wealth is responding by sharpening its focus on rising wealth hub GIFT City and using a hub-and-spoke model to reach clients in tier-2 and tier-3 cities, its president recently told Asian Private Banker.
“The increasing interest in GIFT City is an exciting opportunity,” said Nikunj Kedia, president and head of products at 360 ONE Wealth, which had US$54.6 billion in AUM as of the end of 2023, according to APB Insights data.
"The inbound flow is already substantial, and 360 ONE has recently received approval for an outbound opportunity too. Using the outbound route will allow our clients to diversify into intriguing international investment ideas over the next two to three years. That will be the next big opportunity for us,” Kedia told Asian Private Banker in a recent interview.
While clients seek options to diversify their investment portfolios, the new opportunities arising from GIFT City will make this diversification more meaningful, according to Kedia.
“We envision GIFT City becoming a crucial hub for wealth and asset management, catering to global investors targeting India and Indian residents seeking global exposure,” he said.
Gujarat International Finance Tec-City, or GIFT City, is a business district that aims to be a ‘smart city’ for India’s growing finance and technology sectors. It offers attractive tax benefits, access to domestic and global markets, and a flexible regulatory framework among other things.
“The ease of doing business is consistently improving each month,” Kedia told APB.
Second-tier cities and NRIs
While private banks and wealth managers traditionally focused on several top cities where wealth is concentrated, Kedia said that tier-two and tier-three cities such as Chandigarh, Coimbatore, and Surat have all experienced rapid growth in AUM over the last three years.
“We are now seeing an increase in the flow of funds from tier-two cities in India. For instance, one of our clients, who has built his business, resides almost six hours by road from the nearest airport,” he said.
360 ONE has been employing a hub-and-spoke model to serve clients in smaller cities, where bankers travel from hub locations to more remote areas. “The idea is to have offices in nearly all of these locations over the next three to five years,” he told APB.
To tap into the promising client segment of Non-Resident Indians (NRIs), 360 ONE made a significant move last year by hiring Vikram Malhotra from the Bank of Singapore to lead its global business 360 ONE Global, making it among the first Indian wealth managers to venture into the offshore wealth management business.
The firm is initially focusing on Singapore and Dubai, regions with a large concentration of wealthy Indian diaspora. “It’s still early days for our global business, but we’re excited about the opportunities ahead,” said Kedia.
“We are also seeing a rising appetite for Indian assets across asset classes from individuals and institutions.”
Changing wealth landscapes
There’s a significant shift in client engagement within the wealth industry in India, with more clients recognising the value of paying for advice, according to Kedia.
He told APB that the company’s transition to a recurring revenue business model from a transaction-oriented one has laid a strong foundation for accelerated growth, with a significant part of the transition already completed.
Kedia also observed that while many boutique managers have emerged in India, few have scaled up to effectively serve discerning ultra high net worth individuals. This is reflected by APB Insight‘s AUM data, which show a significant gap between the top seven players and the remaining firms that made it into the top 30 in India.
Rising appetite for co-investments
The strong portfolio performance over the last few years in India also boosted the investment appetites of Indian domestic investors.
According to Kedia, there has been a huge inflow of money into the equity space, which could be attributed to the confidence in the economy and tax changes in India, which makes investing in equity more attractive.
However, he also highlighted the importance of balancing risk management with return optimisation. A key differentiator for 360 ONE, according to Kedia, is its Investment Policy Statement (IPS), which establishes strict guardrails for what can be included in clients’ portfolios.
“We have invested heavily in technology and conducted numerous simulations to help clients understand the impact of their decisions on their IPS,” he explained.
Meanwhile, Kedia told APB there’s an increasing appetite for late-stage pre-IPO strategies and direct transactions from larger family offices, which have become more knowledgeable about the private equity landscape over the years.
In early July, 360 ONE appointed Pankaj Fitkariwala as its chief operating officer. Fitkariwala, who previously worked for Kotak Mahindra Group and Barclays, will be deeply involved in technology developments across the company, the firm said.
In addition to its wealth advisory proposition, alternatives are a key growth proposition for the firm. The 360 ONE Group early this month appointed a new chief executive officer for its asset management arm to enhance its alternative investments capability.
“Clients who have invested in a fund can participate in direct transactions or co-investments,” said Kedia, adding the firm is seeing an increased demand for co-investments.