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Indian wealth manager to compete with foreign rivals through “global Indian” strategy

Asian Private Banker, Dec 20, 2017

Sanctum Wealth Management (WM), the RBS India spinoff, has become the latest firm to adopt a “global Indian” strategy – an approach that is becoming increasingly popular with foreign private banks doing business in India.

The Mumbai-headquartered wealth manager is “well positioned to tackle the non-resident Indian (NRI) and foreign market” through its newly-established international desk and the addition of international senior advisor, Sridhar Natarajan in Singapore, Satwick Tandon, Sanctum WM’s head of international, tells Asian Private Banker.

Having officially opened its doors last April, Sanctum WM currently caters to India-based HNWIs, leveraging off its customer base from RBS India.

Now, the firm wants to cast its net wider by serving NRIs and foreign investors and providing its Indian investors with access to offshore opportunities.

Sanctum WM’s “global Indian” approach involves clubbing together the private banks’ India onshore and non-resident Indian (NRI) operations.

However, while foreign rivals, including BNP Paribas Wealth Management, Julius Baer and Credit Suisse Private Banking are using their established offshore NRI bases to springboard into India, Sanctum WM plans to leverage its onshore expertise to capture inbound flows, Tandon says.

In particular, he points out that the firm’s onshore expertise across asset classes and its foreign currency denominated products will cater to sophisticated foreign and NRI investors looking for exposure that stretches beyond mega-cap listings.

“Investors have traditionally taken equity exposure to India through highly diversified mutual funds, typically investing in the mega and large-cap space in India,” Tandon explained.

“Our belief is that investors are now looking for more sophisticated exposure to India and, therefore, we are taking a thematic approach to our portfolio construction. We will be in a much better position to generate alpha on a risk-adjusted basis if we stick to the strong investment themes.”

Further, Tandon says that Sanctum WM’s legacy as RBS Private Banking will help the firm achieve a level of brand recognition that is comparable to its foreign competitors.

“We have built Sanctum Wealth Management as an onshore India player with the look and feel of an international firm,” he said. “This is further strengthened by key industry players in our senior management, including Rory Tapner, former CEO Coutts Group, as our chairman.”

Strong demand for India access

Tandon said that the firm is seeing a strong demand for onshore access from foreign and NRI investors and this has prompted it to set up an international desk.

Driving this demand are tailwinds in the form of a favourable demographic profile, strong economic fundamentals and a reform-minded government in India that has made the country a strategic destination for investors.

As of March 2017, foreign portfolio investment inflows reached a record of Rs. 557 billion and foreign direct investments (FDIs) into the country have also surged this year. In the first quarter of 2017, FDIs rose by 37% to US$10.4 billion, according to figures from the Department of Industrial Policy and Promotion. India received US$7.59 billion in FDIs from April 2016 to June 2017, the bulk of which coming from Singapore, Mauritius, the Netherlands and Japan.

Tandon adds that the firm will prioritise building its NRI and international desk first before it shifts its focus to giving onshore clients access outside of India.

“While we are currently looking at targeting foreign investors and NRIs abroad looking to invest in India, we are also exploring avenues for catering to Indian investors who are keen to invest outside of India through the various routes allowed by regulatory authorities.”

Partnering with private banks, IAMs

Undoubtedly, Sanctum WM will face fierce competition from domestic players with established offshore players, including the likes of IIFL Wealth and Asset Management as well as foreign private banks, eying India onshore opportunities.

Domestic firms continue to dominate the onshore private wealth market in India, with 13 domestic wealth managers on Asian Private Banker’s India 2016 AUM League Table managing a combined US$65.7 billion – nearly two-thirds of the total assets held by Top 20 heavyweights.

Further, BNP Paribas WM, Julius Baer and Credit Suisse Private Banking are optimistic about the about what their respective “global Indian” strategies will bring their NRI business.

Meanwhile, Tandon says that the firm’s international business will grow in part through partnerships. “Yes, this two-pronged approach has been tried by international players, however our intention is to work with global firms to grow our international business,” he said. “We are looking at teaming up with private banks, multi family offices, independent asset managers and some single family offices to offer our products and solutions accessing India.”

Sanctum WM’s AUM grew by 20% to US$3 billion at the end of 2016, ranking 11th on the Top 20 India AUM League Table.