Foreign private banks are planning to increase headcount in India anticipating new opportunities to advise Indian millionaires who intend to capitalize on the impending Internet start-up boom and economic recovery.
Foreign private banks are expected to recruit wealth managers in 2015 and raise their headcount by a fifth following a drop of 10-15% in each of the past two years, bankers and consultants surveyed by Reuters said.
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India’s rich are now increasingly looking to invest in new-age technology start-ups, and are using wealth managers to guide them on these investments.
Bank of America Merrill Lynch India head for wealth management Atul Singh, "In the first round, it was mostly foreign investors who were chasing the start-ups. Now the Indian HNIs are waking up to this opportunity."
To fulfill this demand, venture funds are being launched that looks to raise money from high net worth individuals to invest in start-ups.
Currently, at least two such venture funds are reportedly raising a combined $160m from Indian investors including wealthy individuals.
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By GlobalDataA wealth manager at an European bank says, "The return from these investments could be double that of the public equity markets. Of course, the risk is also higher and that’s why the clients need advice."
The enthusiasm among Indian investors can also be attributed to the recovering economy which is anticipated to grow 7.4% in the year ending March at a faster pace than China’s in the years to come.
The development is projected to bear a positive output for foreign private banks who are lured by the long-term potential of the market.
These foreign private banks have to bear the brunt of higher operating costs and a limited branch network as against their local competitors.
However, last year a regulatory move has been imposed for private banks which require them to segregate client advisory services from transactions carried out on their behalf. This will allow wealth managers to focus on advice and beat local rivals with better global network.
