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Axis Bank
gears up for Family Office in India
The service is typically meant for ultra-high net worth
investors for a fee of 0.4-0.5% of the assets under management.
Mumbai:
Philanthropy may soon go commercial in a much bigger way for India's ultra
high net worth individuals or families that have assets exceeding Rs100 crore. India's third largest private sector lender, Axis
Bank Ltd. in association with Banque Privée Edmond de Rothschild Europe would shortly be
introducing "Family Office" accounts for Indian business families,
whereby the entire personal and business needs across generations of affluent
families could be managed for a fee.
Family
office solution combines private wealth management advisory services with
management of multi-generational needs, especially children's education to be
responsible successors of wealth, their responsibilities of ownership in the
business, healthcare issues of the family and its following generations. The
financial services under a family office account include management of the
entire assets and investments, tax and legal counselling, estate, bill-paying
and so on.
The service
is typically meant for ultra-high net worth investors for a fee of 0.4-0.5%
of the assets under management.
Axis, which
plans to introduce Family Office solutions for Indians in the coming fiscal
year, envisages assets worth at least Rs4,000 crore
under this business across a clientele of 20 in the next two years. Alain
Mestat, director, Banque Privée
Edmond de Rothschild Europe
said: "
We have an expertise of over 200 years in Family Office
solutions. Through Axis Bank, we intend to offer this service for Indian
families."
Family
office assumes significance when a family-owned business grows to be too big
and complex to be managed in-house. On the other hand, appointment of
different managers for different family related issues could be expensive.
According to
Sonu Bhasin, president,
retail financial services, Axis Bank, 60% of the BSE listed firms are
family-owned, and at least 50,000 families in India have assets worth over
Rs100 crore.
"We are
targeting a market shares
of 5-7% in the Family office space in the next 3-5 years," Bhasin said.
Axis,
however, is not the first to use Family office idea in India. Though
players like Barclays, Kotak Mahindra Bank, and Altamount Capital Management provide Family office
services to the affluent Indian mass, their services are largely restricted
to wealth management and advisory services. "We are looking at
providing solutions for the entire family issues and not only the wealth
management part of it," said Mestat.
At present, nearly 2,500 professionals at Rothschild cater to a number
of global riches across 38 nations. Nearly 75% of Rothschild's family office
business is spread across Europe. Following
its tie-up with Axis Bank, the company will provide its consultancy for
managing family wealth and allocations based in India too. Bhasin
of Axis Bank said that the bank would offer the service to the wealth
non-resident Indians too.
Family
office solution seems to be gathering steam in India now. According to a Merrill
Lynch and Capgemini's Asia-Pacific World Wealth Report , India, alongside China, will remain the main
source of new millionaires for some time to come, with the western economies
still struggling to emerge from the upheavals. The wealth of Asia-Pacific's
high net worth individuals is estimated to grow at a rate of 8.8% annually
until 2018, which is faster than the global average of 7.1%, according to the
report.
The report
added that the number of wealthy in India dropped by nearly a third
to around 84,000 in 2008, following the slump in domestic shares.
According to
Forbes, in 2008, that four Indians were among the 10 richest in the world,
with a combined wealth of $160 billion. Cumulatively, India's billionaires were the wealthiest in
Asia, exceeding even those in China,
with a worth of $335 billion.
Forbes
calculated in 2008 that four Indians were among the 10 richest in the world,
with a combined fortune of $160 billion. Cumulatively, India's billionaires were the wealthiest in
Asia, exceeding even those in China,
with a worth of $335billion.
A rebound in Indian shares have brought the business of family office back on
track.
Richa Karpe, a director at Altamount
Capital, in a recent interview with Reuters said that the firm had signed
seven families so far to advise on assets worth Rs500 crore,
and was in talks with several others who could bring in about Rs3,000 crore.
Karpe said global financial crisis had added to the allure of the
multi-family offices as they are seen independent and have performed
relatively better than traditional wealth managers, many of whom are accused
of selling toxic investments to rich.
Anirudh Laskar
Source : Livemint.com - The Wall Street Journal
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