On a buying binge, wealth-tech platform Scripbox picks up Wealth Managers in 10th M&A deal

Bengaluru-based Scripbox, one of India’s largest wealth managers with assets under management (AUM) of around Rs 12,000 crore, has entered into a strategic partnership with Wealth Managers (India), a Pune-based wealth management firm.

Founded by chartered accountants Bharat Phatak and Ajit Khasnis, Wealth Managers is one of  India’s largest independent wealth management firms. It ranks among the top 50 distributors by way of mutual fund commissions, per data released by the Association of Mutual Funds of India (AMFI), the regulatory body for the mutual funds industry.

This is Scripbox’s 10th acquisition of an independent financial advisor (IFA) or a registered investment advisor (RIA) over the past year and half. Its first acquisition came in December 2020, when it acquired Bengaluru-based Mitraz Financial, a boutique RIA firm.

Since then, it has acquired IFAs and RIAs like Bengaluru-based wealth manager Upwardly, A.K. Narayan Associates, one of Chennai’s oldest mutual fund distribution firms, and Mumbai-based independent financial planner Sujata Kabraji, among others.

Also read: Mergers and stake sales: How MF distributors are trying to gain scale and reach

Although mutual fund distributors, IFAs, and RIAs have been around for years, in recent years we have seen many  mergers of IFAs and RIAs. In February 2020, Mumbai-based mutual fund distributors Roopa Venkatakrishnan and Dhruv Mehta merged their practices with Sapient Wealth, a large Pune-based wealth advisor.

Succession planning

Increasingly, distributors and RIAs who are the sole managers of their practices are realising the importance of what happens to their clients after they retire. Or worse, if they pass on.

“Customers are multi-generational. We don’t just handle our client today, but are supposed to handle the client’s children, and future generations too. Our engagement with them will go on for at least the next 30-50 years. But we, the advisors, aren’t going to live that long. We need continuity. One way to ensure that is by coming together on a platform that lasts longer than us, so that the client keeps getting serviced long after we’re gone,” says Atul Shinghal, Founder and CEO, Scripbox.

Shinghal adds that Covid-19 made people realise that life is fragile and not just investors, but also advisors and distributors should plan their succession.

Wider product suite

When Scripbox was launched in 2012, it was among the first such online platforms. It offered a far easier way to invest.

Scripbox started by offering  packaged portfolios. These are packs of 2-3 schemes designed to help you achieve your financial goals. That works for young investors who are just starting out on their investment journey. But those in their 30s and 40s, Shingal explains, need more engagement and a wider suite of products and services.

That is one of the main reasons why Scripbox acquired Mitraz Financials. While Scripbox is a distributor (it earns commissions from mutual fund sales), Mitraz is a SEBI-registered RIA, offering personalised investment advisory services for a fee.

Similarly, wealth advisors also offer portfolio management services (PMS). That is another new product that Scripbox customers can now expect to invest in.

Margin pressures
Distributors have been under pressure from falling commissions over the years, thanks to SEBI’s reforms. Distributors can earn a meaningful income only if they clock a large volume of sales.

Around 2020, Shingal says Scripbox realised that it needed more `mature’ investors,  those in their 30s and 40s, who invest more. Since those in their 20s — who Scripbox targeted in its initial years — typically invest smaller amounts, the commission income is lower.

The spate of acquisitions might just help Scripbox to grow its revenues.