Billionaire Nirmal Jain bets on India's wealth boom to hire, woo assets

By Siddhi Nayak

 

Billionaire Nirmal Jain aims to double assets at his wealth management firm in two years and triple his frontline adviser base as India’s rich get richer and competition for their money intensifies. 

 

IIFL Capital Services Ltd.’s wealth book of about ₹60,000 crore ($6.6 billion) will expand 80 per cent to 100 per cent over the next 24 months, Jain said in an interview with Bloomberg News in Mumbai. To power that growth, the company has hired about 60 relationship managers in the last 18 months and plans to add 120 more, a sharp ramp-up in a market where seasoned advisers are hard to find.

 

“It’s not easy,” Jain said, acknowledging that compensation levels have surged amid talent poaching across the industry. IIFL will primarily add staff from foreign banks and local wealth management firms, even as rivals offer steep pay increases to lure top advisers.

 

Jain founded his flagship Mumbai-based IIFL Group and grew it into a financial services behemoth, comprising a shadow bank, a retail and institutional broking firm and a discount brokerage arm. The three-decade-old group has propelled Jain and his wife Madhu’s net worth to $1.2 billion, according to the Bloomberg Billionaires Index. 

 

His businesses have gotten strong backing from billionaire Prem Watsa’s Fairfax Financial Holdings Ltd., which is the biggest shareholder in both IIFL Capital Services and the shadow banking arm IIFL Finance Ltd. It is also a major stakeholder in 5Paisa Capital Ltd., the discount brokerage unit. Jain says Fairfax has provided not just financial heft, but credibility.

 

The Toronto-based investment firm is in advanced talks with the India government to buy a majority stake in IDBI Bank Ltd., people familiar with the matter had earlier said. 

 

India has become one of the world’s fastest-growing wealth markets, driven by a booming startup ecosystem, rising equity participation and a steady pipeline of first-generation entrepreneurs. Domestic mutual fund inflows through systematic investment plans, or SIPs, have surged in recent years, broadening retail exposure to equities and creating a larger pool of affluent investors seeking advisory services.

 

India has more than 85,000 high-net-worth individuals — with $1 million or more — which puts it fourth behind the US, China and Japan, according to a report by real estate consultant Knight Frank. India now has 191 billionaires, 26 of them created within the past year – up from just seven in 2019, the report found.

 

The rapid growth is encouraging banks from HSBC Holdings Plc to Standard Chartered Plc to rapidly expand their wealth business in the country. Meanwhile, Indian billionaire Uday Kotak’s private bank is adding thousands of clients, while local wealth manager 360 One WAM Ltd. struck a deal with UBS Group AG in April last year.

 

Jain, who was an early backer of 360 One and remains a shareholder, said product innovation is key to capture the rising demand for wealth management in the country. IIFL Capital is expanding offerings in private equity, portfolio management services, overseas investments, defense-sector exposure and pre-IPO opportunities, he added.

 

The rapid accumulation of wealth in India has reignited debate over inequality, with billionaire Raamdeo Agrawal recently expressing concern that the concentration of stock winnings in the hands of a few is holding the economy back.

 

Jain said while rising asset prices may widen the absolute gap between rich and poor, incomes at the bottom are still growing faster in percentage terms.

 

Entrepreneurs who build wealth also create jobs, he said, cautioning against policies that penalize success. India’s long-term growth depends on striking that balance of encouraging risk capital and innovation, while making essential services accessible, he said.

 

“There are people who take risks, create wealth and generate jobs because they risk their capital and work very hard,” he said. “If you don’t reward them, it becomes retrograde. Nobody will take entrepreneurial risks.”