In recent times, the equity market has been predominantly bullish, touching new heights, while other asset classes delivered robust returns too, leaving investors delighted. Be it public or private market investments, most things investors touch have been turning to gold. As a natural extension, the wealth management industry, which services investors, particularly High Net-worth Individuals (HNIs) and ultra-HNIs, is booming too.
The first episode of ‘The Quest to Invest’, a campaign hosted by Avendus Wealth Management in association with CNBC TV18, deconstructed the evolving trends in this space and offered insights on asset management and exciting investment opportunities. This virtual panel discussion featured two stalwarts who head one of the top financial firms in the country – Avendus Capital.
Moderated by Prashant Nair, National News Editor at CNBC-TV18, the discussion with Ranu Vohra, Co-founder and Executive Vice Chairman, Avendus Capital and Nitin Singh, MD & CEO, Avendus Wealth Management, shed light on the changing face of the wealth and asset management industry and offered some thought-provoking take-aways.
“This industry is extremely competitive and commoditized, and customers are highly demanding, as their needs constantly evolve,” shared Nitin Singh. He explained that the wealth management business revolves around three things: Platform, Processes and the People who deliver the service. “We are one of the largest private banking outfits, in terms of the breadth and depth of what we offer. In fact, we have literally created the market and built an ecosystem on the alternative or private market investment side, where domestic pools of capital, especially UHNI investors, get access to high quality private market investment opportunities. Today, we’re the first port of call for entrepreneurial fund managers and start-ups for raising capital,” he said. While Avendus started out as an investment bank around 21 years ago, today, it is an integrated financial services firm, offering clients access to a full suite of differentiated solutions in the areas of asset management, credit solutions, investment banking and wealth management. “Entrepreneurs and business owners are our core base. We provide them with solutions to adapt to the new realities around them, and the evolution of the business itself,” said Ranu Vohra, setting the context for the company’s expansion beyond investment banking.
Avendus Wealth Management crafts bespoke solutions for its clients, leveraging on the strength of its greatest asset – the pooled intellectual capital of the team. “We have built several proprietary due diligence and evaluation frameworks backed by strong analytical rigor and our deep understanding of the space to offer superior products and solutions to our clients. This has enabled us to contribute towards their wealth creation and also manage over USD 4 billion in AUM across more than 1200 families,” Ranu Vohra said.
The asset management business of Avendus has scaled up products across a wide range of categories, including a market-leading hedge fund, the largest long-short fund in India, long-only pure equities and both PMS and off-shore asset management business – the FCA authorized, Ocean Dial. On the private equity side, Avendus offers the Future Leaders Fund, which looks for opportunistic access to highest quality, late-stage growth companies.
Complementing all these avenues, the company offers structured credit solutions to entrepreneurs and organizations. “These are not plain vanilla solutions, like those offered by classic banks. They are very differentiated solutions based on the need of the entrepreneur. I like to call it ‘flexible capital’,” shares Ranu Vohra. Coming back to private equity, he narrated how until 2015, the UHNI segment was restricted to Angel investing, which entailed early participation in companies with smaller cheques and with the potential of an exit in subsequent rounds of financing. In more recent times, however, many Angel investors have witnessed more seamless exits and higher returns, endorsing the credibility and lucrative nature of this asset class.
He also pointed out that when Covid19 erupted, it was expected that investors would become more conservative due to the uncertainty. But surprisingly, as the crisis accelerated Digital and Tech in all sectors, ranging from ed-tech and logistics to traditional e-commerce, value creation for investors increased significantly. This triggered an increased flow of risk capital.
Nitin Singh added, “We believe that India poses a trillion-dollar digital opportunity and we’re extremely bullish on this space.” He advised that it should become a significant chunk of an investor’s alternative asset portfolio because it has the potential to deliver multifold returns over the next 7-8 years. “As digital technology has become more mainstream, value creation within this ecosystem over the past 2 years itself, has become more than it has been over the preceding 10 years,” he pointed out. “We’ve had 14 unicorns come through in the first five months of this calendar year as compared to 11 in the whole of last year.”
Nitin Singh recounted that, other than private markets, HNI investors were beginning to show increased interest in new age fixed income solutions like market-linked debentures, venture debt and structured credit funds as investing through more traditional fixed income formats, like mutual funds, could not do justice to the credit and duration risk involved.
Within this milieu, wealth managers are expected to curate differentiated ideas, stay ahead of the curve by uncovering opportunities, identify evolving trends and execute them efficiently for investor portfolios. “It’s a very interesting time to be a wealth manager,” concluded the thought-leaders. “It’s becoming a business that’s all about value-add, based on the advice and insights that you deliver.”