Edelweiss Wealth eyeing inorganic growth, says CEO Jain

Edelweiss Wealth Management (EWM), the second largest non-bank wealth management business in India, is actively looking at inorganic growth to become a dominant player in the fast growing wealth management market in the country, it’s Chief Executive Officer Nitin Jain has said.

Jain sees acquisitions giving a fillip to the growth of EWM, especially after PAG, one of the world’s largest Asia-focused investment groups, few days back announced its partnership with Edelweiss Group and made a ₹ 2,200 crore strategic investment in EWM for a 51 per cent stake.

“With PAG as a partner and no capital constraint, we are actively looking to grow inorganically, and are keen to evaluate opportunities in the market to acquire wealth managers and distributors. This should give us an additional fillip for growth”, Jain said.

The targets that EWM will look at are either clients or capabilities— franchises that have built lot of clients but are unable to monetise it because of product or other issues like resources. The ones that EWM will acquire will not necessarily be only boutiques, but also mid sized organisations that are not growing due to lack of innovation either on product or advice side, he added. “ We will also look at acquisitions in the FinTech space. In the medium to long term, technology will play a major role in the wealth management space. Eventually it has to be combination of people and technology”, he said.

EWM will eventually be demerged into standalone entity where current shareholders of Edelweiss Financial Services (EFSL) will end up holding EFSL’s position in the wealth management company. Over the next 12-18 months, EWM will also get listed in the stock exchanges, Jain said.

A listing will give a strong currency to the franchise. Clients will also get trust which goes up meaningfully because of the visibility. Listing will also reward EFSL shareholders as they have direct access to wealth management business and can hold direct positions rather than coming through the conglomerate, according to Jain.

EWM provides wealth management and capital market services to over 2,400 of India’s wealthiest families as well as 6,10,000 high net worth individuals and other affluent clients. EWM has grown its customer assets under advice with a 44 per cent cumulative annualised growth rate from ₹ 18,500 crore in fiscal year 2014-2015 to ₹ 1,27,000 crore in the first quarter of fiscal 2020-21.

The ₹ 300 lakh crore Indian wealth management industry has been expanding rapidly at a five year cumulative annualised growth of 11.3 per cent. With a strong growth trajectory of 12.5 per cent per year, it is expected to reach ₹ 540 lakh crore in the next five years, presenting a large opportunity for EWM.

Jain highlighted the increasing formalisation of the wealth management space in the country and noted that this augurs well for EWM.