Oct 26 (Reuters) — U.S. buyout group General Atlantic has agreed to buy a 21.6 percent stake in India’s IIFL Wealth Management for 11.2 billion rupees ($173 million), the first private equity investment in the country’s fast-growing wealth management business.
Indian wealth managers are hiring more staff and expanding in smaller cities, seeking to attract rising numbers of newly minted millionaires as high costs and regulatory restrictions drive some global rivals to scale down.
India was the world’s fastest-growing wealth management market last year, according to a CapGemini and RBC Wealth Management study, spurred largely by rising personal income as well as a boom in e-commerce start-ups.
To take advantage of the growth, local firms such as IIFL Wealth and Kotak Wealth Management, which have long dominated the industry, plan to add more branches and bankers in the coming months.
IIFL Wealth manages assets worth about $12 billion and General Atlantic’s acquisition of a stake will reduce the holding of parent company IIFL Holdings Ltd to roughly 54 percent, IIFL said in a notice to exchanges on Sunday.
The rest will be owned by the staff of IIFL Wealth, a person with direct knowledge of the transaction told Reuters on Monday, adding the fresh funds would be used to expand its services and launch new investment platforms.
IIFL Wealth plans to increase the number of its client-facing staff to 200 from 160 in the next couple of months, its Executive Director Yatin Shah told Reuters last month.
Local firms control 75 percent of the Indian wealth management market, industry executives say, and their expansion plans will put more pressure on global banks, which are struggling with higher wages and a narrower client base. ($1 = 64.9525 Indian rupees) (Reporting by Sumeet Chatterjee; Editing by Susan Fenton)