The Hindu Business Line : ‘Plenty of unlisted ventures have created wealth for families’

Kolkata, Oct. 21 The recent increase in overseas investment ceiling for resident individuals is just an enabler, which may well be used only by those who find it compelling to broadbase their portfolio with global assets, argues Mr Anup Bagchi, Head – Global Private Bank, ICICI Bank. “Why should you necessarily look overseas when the Indian market is doing so well?”, he asks.

Excerpts.

If you exclude real estate, in which asset classes is the wealthy Indian invested in seriously?

Real estate, including property that has been inherited, currently accounts for a significant part of individuals’ wealth. Now, if we take that out, well-to-do Indians will be seen to have a large exposure to equity. Equity allocations often come by way of their businesses, considering the companies they have come to manage. I am not talking about listed companies alone.

There are plenty of unlisted ventures that have created wealth for families. In fact, for many wealthy people, awareness about valuations is just setting in. Business people are now more willing to sell a small portion of their companies, may be 10-15 per cent, to get equity support from outside.

What sort of global products are likely to enter Indians’ portfolios in the days ahead?

A small section of the market is indeed looking at diversifying, going beyond the country’s borders. The Asian countries look particularly attractive at this stage… not Europe or the USA. The point is, investors are in no great hurry to go overseas, not when India itself is performing superbly.

The growth in number of Indian millionaires, considering those who have made money within the country, was never faster. This is a pointer of sorts. As for products, Indians are generally getting more comfortable with structured products, derivatives and real estate. And in certain discerning quarters, there is great awareness about global developments, including crises such as the one brewing on the sub-prime front.

What will drive private bankers’ business in the days ahead?

Several factors have come to the fore in recent years. The SME segment is booming, leading to demand for investment banking for smaller companies. Many of the latter are generating wealth for the entrepreneurs concerned. The second generation, in the post-liberalisation era, is coming into its own, triggering unique issues relating to efficient transfer of wealth.

A growing community of ESOP holders is another driver for us. Also, the real estate boom has created quite a different kind of wealth in the country. Elements such as these will help the private banking business to grow. On another front, wealth preservation is a major concern for some sections. And for others, many of whom are relatively younger, risk-taking ability seems to be higher.

But competition among private bankers is increasing?

True, especially so after the arrival of several large global majors. However, many of these players mostly limit themselves to investment and investment advisory. They do not provide business banking. Or even tax advisory. For a bank like ours, which integrates many services, private banking is a natural business.

The domain is widening because of growing numbers, reflected in the expanding client base.

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