The asset and wealth management space has been warming up of late with merger and acquisitions. Last month, 360 One WAM (formerly IIFL Wealth Management) entered into a definitive agreement to acquire Batlivala & Karani Securities India Private Ltd and Batlivala & Karani Finserv Private Ltd for ₹1,884 crore.
B&K is a leading mid-cap brokerage, servicing major foreign and domestic financial institutions. The company is a full-service broker dealing with institutional investors and also offers corporate treasury services. The acquisition, structured as a combination of a stock swap and part-cash transaction and subject to regulatory approvals, will help 360 One offer broking services across ultra-high networth individuals, high networth individuals, institutional and retail investors.
Last week, Choice Equity Broking, a brokerage firm and a subsidiary of Choice International, acquired Arete Capital Services, a wealth management firm with an AUM of ₹5,151 crore. With this acquisition, Choice Broking’s total wealth management AUM will grow from ₹1,090 crore to ₹6,241 crore, representing a 5.73 times increase — nearly a sixfold expansion in its total AUM.
InCred deal
Very recently, the InCred Group announced the acquisition of Arrow Capital (DIFC) Ltd, a leading boutique financial services firm based in Dubai. Arrow Capital, founded in 2016 and regulated by the Dubai Financial Services Authority (DFSA), caters to ultra-high net worth individuals, families, trusts, and corporate entities worldwide. The firm’s services span wealth management, investment advisory, corporate finance, and asset management, aligning with InCred’s vision to provide holistic financial solutions to its global clientele.
Following the acquisition, InCred Global Wealth, with offices in Dubai, Singapore, and London, will manage assets exceeding $2 billion, a remarkable milestone for a firm that began operations just over three years ago.
Sharekhan to Mirae
Last year, South Korea’s leading asset manager Mirae Asset Financial Group had acquired Sharekhan Ltd, one of the top brokerages, to enhance its presence in the Southeast Asian country. Mirae Asset Securities Co acquired Sharekhan from French investment banking group BNP Paribas for ₹3,000 crore. The purchase includes not just Sharekhan, a traditional brokerage house with a business focus on stock trading, but also three other affiliates – Espresso, an online stock trading firm; a non-banking financial company (NBFC) that offers personal loan services; and Sharekhan Dot Com.
This consolidation phase is happening at a time when a number of ultra high net worth individuals is likely to see strong growth in India. The number of UHNIs, according to a report by Anarock, may surge by another 50 per cent by 2028, far outpacing the global growth average of 30 per cent. The number of HNIs may double to 1.65 million by 2027. Over 15 per cent of India’s HNIs are under 30, driven by start-up unicorns, IPOs and tech-driven ventures, the report said adding that the number is expected to rise to 25 per cent by 2030.
High competition
One of the possible reasons for the consolidation could be the fall in management fees due to increased competition from fintech companies and others. With the fixed cost component such as salaries and fund administration costs rising, wealth management firms need scale to remain successful.
Sadly, deals of B&K Securities and Sharekhan, traditional home-grown players, suggest what Uday Kotak recently said is true. The founder of Kotak Mahindra Bank has lamented on the decline in economic ‘animal spirits’. He highlighted the diminishing entrepreneurial skill of the heirs of business families, who prefer investment management over active business operations. And, that this is happening in the wealth management space is an irony. Surely, interesting days ahead for wealth management.