Shriram Capital is leveraging its existing depositor base to enter the wealth management space through a joint venture with Sanlam Group, seeing it as a natural extension of its established insurance business, said Subhasri Shriram, CEO and Managing Director, Shriram Capital.
During an interaction with Moneycontrol, she said, while the company has traditionally catered to the mid-income segment, a significant portion of its customers already possess investible surplus, making them potential clients for wealth products.
Rather than directly competing with established players like 360 One and IIFL, Shriram aims to serve an underserved investor base and move beyond conventional classifications like HNIs and UHNIs, offering tailored solutions to anyone with investible wealth, she said.
Edited excerpts of the interaction with Shriram Capital MD and CEO Subhasri Shriram and Sanlam Group CEO Paul Hanratty:
What led to the decision of venturing into wealth management at this point of time?
Subhasri: The Indian economy has been doing exceedingly well. I also see the demographic of the country changing in terms of the investible surplus available in the hands of the people, and this trend is actually moving from big cities to smaller towns, as well. There is a lot of potential. Moreover, insurance can be viewed as an extension of investment; people start with protection and move into investment wealth. With our insurance arms stabilising, venturing into wealth management is a logical progression
Paul: Shriram Capital came to us and said they see their customers now beginning to have a need for wealth and asset management products. Moreover, customer evolution in India has led to a point where there is a high demand for these products now. Economies are growing and people are getting wealthier. So, we are getting into a partnership in this area to build a really big wealth business in India.
It has taken you 20 years to build the kind of business you have in the insurance space with Shriram Capital. How long do you expect to take to build the business in the wealth space?
Paul: I guess it would take another 10 years.
Shriram Capital has traditionally catered to the mid-income group. Isn’t wealth management an aberration?
Subhasri: Our fixed depositors may not consider Shriram Capital as their first choice for investment. For example, they might typically invest around Rs 6 lakh in a bank and then allocate an additional Rs 5 lakh with us. The average deposit size is Rs 6 lakh, indicating that a substantial portion of our customer base already has investible surplus.
So, who is your target customer? Would you leverage the already existing base you just mentioned or would you also have to build a fresh base from scratch?
Subhasri: Yes, while we do have an existing customer base, we cannot afford to stop there. While my existing customers would always be my priority, when we are entering a new business, we would definitely have to build a fresh base, as well.
What would the capital structure look like?
Subhasri: It would be a 50-50 split.
Sanlam has had years of experience and knows what it takes to build a wealth and asset management business. You have done it in other places. What do you think it takes to build a wealth business in a country like India? What are the nuances in terms of challenges?
Paul: Most Indians still face significant restrictions on how much wealth they can manage globally. In contrast, European markets have no such restrictions, and South Africa has relatively fewer. For our wealth clients in South Africa, about half of their assets are managed globally, and the other half domestically. When it comes to new investments, the split is around 90 percent global and 10 percent local. In India, however, the trend is reversed, with roughly 90 percent of wealth managed locally and only 10 percent globally. However, in 50 years, this will change significantly, and Indian clients will have a much more global approach to managing their assets.
How much would you predict that to be in terms of numbers and how many years down the lane?
Paul: That is something that will purely be driven by your regulatory environment.
What would your classification of customers be?
Subhasri: We aim to move beyond our usual classification of segments like HNIs, UHNIs, and family offices. In a lending business, it is crucial to focus on the customer directly, not just the intermediary providing the profile. Similarly, in wealth management, we want to prioritize the customer and offer the most suitable advice and solutions. To answer your question, anyone with investible surplus is considered our customer, whether they have Rs 50 lakh or Rs 500 crore in equity.
How do you plan to compete with 360 One, IIFL, Nuvama, or other banks? What sets you apart from them?
Subhasri: I’m not here to find a difference. Let us acknowledge that there is space for all of us in the market. I don't aim to take customers away from 360 One, Nuvama, or other players, as the market has its limits, and Shriram must operate within those. We believe there is a large group of investors who are currently underserved, and that’s where we see our opportunity. I’m not looking to offer something radically different from existing players, but rather to serve those who are not being catered to. This is a business that requires building long-term partnerships with established partners.
Paul: This partnership is not something we took up in a jiffy. It has taken us one and a half years to make this a reality. And we’re looking to partner with India as a partner for 100 more years.
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