I believe that we are currently at the cusp of a great opportunity. The strong stockmarket performance and a spike in savings has fuelled a wealth boom globally.
The past year has been unprecedented in many aspects. Our homes became our newworkspace
Zoom calls replaced chats by the water cooler and brainstorming sessions were dictatedby the
Wi-Fi. All this happened even as we and the rest of the world dealt with the stressand fear of managing the pandemic and its widespread impact.
With no playbook in hand we drew on the strength and support of our people to navigatethrough these unprecedented times. Henry Ford once said 'Coming together is a beginning.Keeping together is progress. Working together is success.' In the past year this hasbeen exempli ed by our people and partners who have come together in varying ways tosupport each other and the organization.
It is this solidarity that has held us in good stead and will continue to anchor us aswe wade through choppy waters in the aftermath of the pandemic. Inevitably the way wework and interact has irrevocably changed. At the same time the uncertain and high-risklandscape has put a spotlight on risk-mitigation and now more than ever before broughtto fore the importance of astute nancial planning.
Technology is now playing a more integral role in our client's journey and is becominga fulcrum for growth. In parallel the investment landscape is also going through atransition as tech-powered innovation engenders new products and unique investmentavenues. A digital revolution is underway and we are enthused by the large number ofpossibilities in terms of product and service innovation that we as one of the leadingwealth managers of India can provide to the industry.
I believe that we are currently at the cusp of a great opportunity. The strong stockmarket performance and a spike in savings has fuelled a wealth boom globally. According toa report by
Boston Consulting Group (BCG) nancial wealth in India grew from 2015 to 2020 by 11%per annum to $3.4 trillion and is expected to grow by 10% per annum to $5.5 trillion by2025. India is expected to lead percentage growth of fortunes in the coming years and thataugurs well for IIFL Wealth
& Asset Management. Your company is well-poised to seize opportunities by optimallyleveraging technology while staying tethered to our core philosophy of putting people rstand retaining the human element in wealth management. Less than 15% of high net worthindividual (HNI) nancial assets is managed by the top 25 wealth managers in India. Overthe years several global wealth managers have reduced their presence in the country evenas Indian wealth managers continue to increase their share. Your company has forti editself as one of the leading pure wealth management company in the country with assetsunder management of over `246000 Crs as on March 31 2021.
In the pages ahead you will read about how your company's bold move to change itsbusiness model a couple of years ago has resulted in enhancing our leading position inthe industry. On the asset management side too our AMC has continued to innovate andpioneer thematic funds which have seen an overwhelming response. You will be pleased tonote that IIFL
Focused Equity Fund was amongst the best performing funds in its category.
The year gone by has been one of the toughest years for businesses across the globe.The future belongs to those businesses that can harness the value contributed by theirpeople to create the right products and distribute them in the most e cient way possible.
I would like to sincerely thank our fellow Board members our stakeholders and ourinvestors for their constant support and trust reposed in us. Your company's Boardremains committed to ensure the highest levels of corporate governance.
As we keep a close eye on the changing wealth management landscape we are con dentthat with the support of the management and the people at IIFL Wealth and AssetManagement we will continue to capitalise on emerging opportunities that can deliver longterm sustainable growth for our clients our employees and our stakeholders.
Our annual report this year is dedicated to our people who are our wealth.
IIFL Wealth Management
From The CEO's Desk
Your company is a roster of relationships between people processes and products; withthe potential to provide for and preserve the interests of all stakeholders.
The year gone by has been unprecedented not only in terms of the impact of the pandemicbut also from the perspective of how people came together to collectively support eachother envisage solutions and embrace new ways of working and interacting. The IIFLWealth and Asset Management family has shown immense resilience and achieved strongperformance across nancial and other metrics. Our growth momentum remains strong and wehave been able to focus on successfully executing our critical strategic initiatives aswell as initiating new ones. We look to sustain this performance and continue our deliveryon growth as well as shareholder value. While the prevailing environment continues to beuncertain both in terms of the pandemic and economic reconstruction we have been able tosupport our clients with advice product innovation and the required agility as togetherwe navigate the current environment. We dedicate this annual report to all our peopleclients and stakeholders who have empowered us and enabled our success.
The Asset Management business continues to show stellar growth and maintain its topquartile position on performance. We continue to focus on scaling up and selectivelyadding to our identi ed strategies including the long-short strategy. Having an in-houseasset management company and NBFC also allows us to o er customised solutions to ourclients. We are also one of the largest trusteeship services in the country and the chosenAdvisor to our Client families. The team here includes estate planners and quali ed legalprofessionals with experience of handling complex and sensitive matters.
As with all businesses the COVID-19 pandemic has ensured a signi cant degree ofadoption to digital activities. Most of our clients are now actively engaging with ourrelationship teams online and using our digital platforms more than ever before.
Financials: Performance despite Pandemic
Our overall AUM increased to `207044 crores up 31.9% for the full year. Our AverageRecurring Revenue (ARR) Assets increased 12.7% QoQ to `101969 Crs up 62.9% for the year.Total net ow for the year was more than `14000 Crs organically without including the owsthat came in as a part of the L&T acquisition completed in April of last scal. Wereported an overall revenue of `1053 Crs up 23.74% YoY. PAT for FY21 was up 78.9% at`369 Crs from `206 Crs in FY20.
Our overall Cost to Income ratio has reduced to
54%. This is testimony to our focus on increasing productivity as well as the costoptimization initiatives that we have been undertaking over the last scal.
We maintained our aggressive dividend policy by paying out more than 70% of our FY21PAT as dividend translating into `30 per share in addition to the special dividend of Rs.40 paid as a part of the capital release initiatives.
Revenue model: Bold move turns resilient
Two years ago we embarked on a journey to create a more resilient and sustainablerecurring revenue model which is in line with global practices and followed by majorglobal private banks. This not only boosts the rm's revenue predictability but also o ersthe clients a better outcome under advisory and other portfolio management o erings. I amhappy to share that this transition has been progressing on a strong clip and our totalrevenue is back at FY19 levels. More importantly the share of Annual Recurring Revenue(ARR) in the revenue from operations has increased from 43% in FY19 to 63% in FY21. Thisis on track to get us to the steady state of about 70 to 75% ARR over the next year. Wecontinue to focus on fostering deep client relationships and holistically meeting theneeds of our clients. Our success is re ected by the ~99% client retention seen during theyear.
IIFL-ONE: Still one of its kind
Our momentum and focus remain very strong on IIFL-ONE covering advisory and PMS boththe Discretionary PMS and Non-Discretionary PMS propositions. Under IIFL-One we have seenhealthy growth with assets crossing the
`30000-crore mark. The proposition continues to gain acceptance across clients to thebroader industry even as we continue to sharpen our propositions further to remain themarket leader in this space. We continue to invest in the right sales product andadvisory teams with a focus on hiring as well as upskilling our existing teams to meetemerging client as well as industry requirements.
Asset Management: Superior performance
Di erentiated o erings
Our alternates-focused asset management business has seen extremely strong tractionwith
70% increase in AUM for the full year. We continue to see strong ows into our listedand unlisted equity strategies driven by the strong performance of our funds the dierentiated o erings as well as large institutional mandates. Manoj Shenoy assumed chargeas the Chief Executive O cer of our AMC with Anup Maheshwari continuing as the CIO. AmarMerani joined to head the Real Estate Strategy further strengthening our seniorleadership team. The AMC business is seeing tailwinds on the back of healthy performanceacross all our funds. Our listed equity mutual funds and portfolio managed schemes havedone extremely well and we have also seen a stellar performance from our large pre-IPOfunds on all the listed equity positions. The AMC has received a very encouraging responsefrom both new institutional clients as well as large distributors in the market. As wemove forward in this business we are well-positioned to win mandates as well asregistrations with a lot of large distributors and institutional clients.
Digitisation: Adding a human touch
The COVID-19 pandemic has accelerated a digital transformation that was alreadyunderway.
Investments in the technology and digital domains continue to be active across allaspects of our business. From comprehensively reimagining our client and banker journeyswith the new age lens to deploying technology to drive operational e ciencies and greaterintegration even with our external service providers we continue to explore digital- rstapproaches to drive future growth.
Our ecosystem is built keeping in mind our clients' requirements at the forefront. Theclient web and mobile apps are used to access portfolio information; a multi-family o cesystem Altiore provides clients their entire family net worth. We also launched a WhatsAppChannel for our wealth and asset management clients which they can use to reach out to usfor portfolio statements queries product information and even schedule a review.Internally we strengthened our relationship managers (RM) analytics platform Insights andhave a strong
CRM system that provides RMs complete details of their client portfolios and datalinked intelligence.
Digitisation is a priority as the rm upgrades and as new technologies evolve at anever-greater pace. We have appointed a leading global consultant to accelerate our digitalstrategy and initiatives on digitisation prospecting and onboarding of new clientstransaction execution and document signing are underway. Our app-based dashboards andportfolio review mechanisms provide clients and RMs seamless access to portfolio holdingsand analytics. Our new technology model is increasingly independent of asset and physicalinfrastructure - it is cloud-based and digitised; yet tethered to our core values ofhuman relationships that help engender greater client retention and loyalty.
Work From Home: Unleashing people potential & performance
Even before the early COVID-19 wave was impacting everyday business matters we enabledour people to e ortlessly operate from home. Your company is a roster of relationshipsbetween people processes and products; with the potential to provide for and preserve theinterests of all stakeholders. We played to our strengths. With laptops being deliveredhome and remote access for everyone; a resilient team ensured that client servicing stayedtop priority.
Our people ensured not only client retention but also new client additions during theyear - a culture we built with our people's agility and focus. A culture which draws fromthe spirit of every team member stakeholder investor and client who form our ecosystem.
We ensured vaccine provisioning for our teams and the pre-emptive safety of our people.We bolstered our wellness services to take care of the morale and motivation of ourpeople. From a doctor-on-call yoga sessions access to medicines and to mental healthservices and resources we see the impact of the care-like-home culture we built inresponse to the pandemic. We reinstated salaries six months ahead of plans and alsoprovided a direct increment in the salaries below a certain threshold months ahead of theannual appraisal process.
Client Experiences: Curated to perfection
Keeping in mind the safety and convenience of our clients our client engagementactivities were transformed to mostly online activities during the year which includedMasterclass series featuring among others legendary investor Prem Watsa and William EFord CEO General Atlantic; a Young Leaders Program aimed at preparing the nextgeneration of leaders; IIFL-ONE Class Apart - a series on Wealth Preservation andTechTalks -featuring new age companies. IIFL WAM was closely associated with theInvest India 2020' conference focused on further strengthening business ties betweenIndia and Canada where our Honourable Prime Minister Narendra Modi delivered the keynoteaddress.
Giving back to society: Laying a strong foundation
We at IIFL Wealth and Asset Management strongly believe in enabling inclusion andlaunched collaborative e orts with existing philanthropic organisations to move the needleon impact. During the year we established the
IIFLW CSR Foundation to design and execute our Corporate Social Responsibility agendawith a focus on Education and Healthcare including COVID relief. We've contributed towardsGive India's India COVID Response Fund (ICRF) and supported relief initiatives thatimpacted over 56 lakh lives across 115+ towns and cities with cash relief supporthumanitarian aid and healthcare interventions.
As we look back at the year that was the spirit and un inching support of our peopleand our partners stands out like a beacon of light. We remain extremely conscious of ourresponsibility towards our people our investors and the environment and are committed toplaying a strong role in the sustainability and conservation of our planet. We willcontinue to support our people and look at initiatives for increasing productivitydeployment of technology and selective outsourcing of transactional activities.
The landscape of the world has irrevocably changed in the aftermath of the pandemic.While uncertainties and challenges will continue to persist the human spirit will alwaysemerge triumphant. We understand that the future holds immense opportunities. At IIFLWealth we are ideally positioned and committed to delivering the best to our clients ourpeople and our shareholders.
|Karan Bhagat |
|Founder MD & CEO |
|IIFL Wealth & Asset Management |
OUR PEOPLE MANAGE WEALTH FOR YOU YOUR FAMILY AND YOUR BUSINESS.
IIFL Wealth & Asset Management is a client-focused company o ering wealth and assetmanagement lending solutions and estate planning services. Our values and ethos haveensured we are able to take a long-term view with our clients employees and shareholders.Our unique integration of people platform products and principles - The Capital Code aswe call it has helped us drive innovation across products and services by adopting thelatest technology. To think long-term means to resist the temptations of short-term gainsin favour of sustainable decisions. Our relationships and business have a long-term focustowards the lasting bene t of our clients investors and employees.
Since inception the company has served the highly specialized and sophisticated needsof high net worth individuals (HNIs) and ultra-high net worth individuals (UHNIs) familyo ces and institutional clients through a comprehensive range of tailored wealthmanagement solutions. As one of the largest players in the wealth management space we areable to provide clients with preferential access for sourcing and customizing investmentswith fund houses institutional brokers and boutique managers. The company recognised thatincremental innovation was vital to develop a holistic products platform that serves theevolving needs of the uber-rich. Crafting strategies that convert market challenges intoopportunities is the key to creating and preserving wealth. We help India's wealthiest topreserve protect and grow their legacy.
Our sizeable and growing asset management business has a leadership in alternates andis the second pillar of the rm growing independently but with lots of synergies.
A disciplined and active investment management approach combined with intensiveresearch allows us to tap into India's potential to facilitate long-term wealth creation.Sharp focus remains on nancial due diligence to achieve the goals of capital preservationand growth. Our diversi ed suite of mutual funds portfolio management schemes andalternative investment funds span across public and private equities with xed incomesecurities.
We facilitate generational planning and asset transfer for clients by assisting onstrategic trust formation and investment management of business and personal assets toensure longevity of the solutions. We are the largest trusteeship service in the countrywith more than 650 High Net Worth and Ultra-High Net Worth families as clients.
We o er a range of lending solutions to our clients across the spectrum of structuredleverage. Our loan book of `3620 crore as on 31st March 2021 makes us the leading NBFC in
India by asset size in the wealth management industry. We are rated AA by ICRA thehallmark of trust among large institutional investors. To date we have provided over1000 customers access to capital to facilitate investments in the markets meet shortterm working capital requirements early stage debt and even to undertake largeacquisitions.
In wealth management we engage with clients in multiple capacities under one platform.These include distributor advisory broker PMS manufacturer AIF manager mutual fundmanager alternative investments manager and portfolio manager. As a distributor we haveone of the most comprehensive product research teams enabling our open architecturerecommendations across multiple product providers and asset classes. As an Advisory oering we provide our clients di erent facets - pure advisory business non-discretionaryPMS business as well as discretionary PMS business. As a broker we o er cost-e ective ande cient prime brokerage services to our clients across all asset classes. As a PMSmanufacturer we o er both discretionary and non-discretionary options across risk pro lesas well as customised bespoke mandates. As an
AIF manager we are a market leader with cutting-edge solutions across private equity;pre-IPO as well as structured credit ideas. As a mutual fund manufacturer we provideselect equity and debt strategies all of which continue to be in the top decile in termsof performance on a consistent basis. Our NBFC o ers access to preferential lending terms.The company's trusteeship service is one of the largest in the country and the chosenadvisor to more than 650 High Net Worth and Ultra High Net Worth families for estateplanning.
CUSTOMER SEGMENTS WE CATER TO
Entrepreneurs: Who have sold their businesses either partly or wholly Seniorexecutives: Who have exercised their stock options or sold equity in their rms
Professionals: Including doctors corporate lawyers actors
Medium to large industrialists: Marquee families with substantial liquidity intheir personal books Corporate treasuries: Our expertise in Fixed Income and Debtand our capability to synthetically structure products give us access to some largecorporate treasuries
Funds endowments and family o ces: Account for 70% of the international assetsunder FII sub accounts
Large traders: Our focus is on utilization of platform (funding limits speed ofexecution and service levels)
Five Ps of Wealth Management
These 5 pillars are instrumental to our success as they work together to perfectlyalign the client's need and what the market has to o er.
Wealth management is a people-centric business with high engagement levels. A qualityteam of experienced professionals across relationship management service managementproduct and other support teams ensure that the highest level of service is provided toour clients. The team undergoes continuous learning through one-to-one mentorships and ourdedicated Learning Management System (LMS) group engagements and access to courses fromleading global universities. Despite the pandemic the number of hours of trainingincreased to 13000+hrs with 21 unique training programs through Virtual instructor-ledtraining
(VILT) & online sessions. These included trainings like Negotiation Strategic& Trusted
RM Interpersonal skills Time Management
Managerial E ectiveness and several master classes both for sales and non salesfunctions.
Employee equity ownership and a strong internal culture has led to perhaps the lowestattrition in the industry for team leaders.
Our ability to o er full scale wealth management services gives us the edge. We have anopen architecture with a multi-manager platform. The manufacturer selection process isrigorous and unbiased. Clients can segregate and manage their portfolios through variousmodes of engagement simultaneously. We provide avenues for diversi cation across assetclasses.
This provides the ability to generate steady-state returns above in ation with theleast volatility and risk.
Our comprehensive suite of products and services is perhaps unmatched in the industry.We have one of the largest products and investment teams which provide innovation andhigh-quality support. Our cutting-edge technology ensures the best in class ClientPortfolio Reporting In-Depth Analysis and Data Aggregation. An integrated lendingsolutions o ering along with a strong estate planning practice complete the platform.Niche corporate nance services help clients with capital structuring for these businesses.
We have stringent standardised control mechanisms which include personalised reviewand an assessment by the fund management team. Our Portfolio Management Approach ensuresclient portfolios are managed in line with de ned Investment Policy Statements which areconstantly monitored. Strong business intelligence state-of-the-art technology and robustinternal processes ensure seamless and e cient execution.
Transparency and alignment of interest is synonymous with our rm. With the launch ofIIFL-ONE we pioneered the fee-based portfolio management model in India. Our combinedplatform which includes brokerage and allied services allow for All-In-Fee models whichensures that our e orts are completely in alignment with our client's objectives. From aclient's perspective our scale enables attractive pricing of products.