More firms entering family offices space

There was a time a couple of years back when every financial service group was trying to get into the mutual fund industry. A boom and a bust later, there’s a hot new opportunity that has caught their fancy.

At least three new players — Quant Capital, Barclays Wealth and DSP Merrill Lynch — have planned forays into the family office practice.  ASK Wealth Advisors, Kotak Wealth Management and Bajaj Capital are among the big names that have started family office services in India.

A family office manages the assets of the ultra wealthy and provides advice and services related to the legal and taxation aspects of managing family wealth. It helps clients acquire wealth, build and protect it, use it and pass it on to the heirs.

While Barclays Wealth acknowledged the opportunity that many others are also eyeing, it was non-committal about any plans to set up a dedicated division for the segment.
Quant Capital said it would be launching a family office practice soon while DSP Merrill Lynch did not comment on the story.

Barclays is already an established player in the wealth space internationally and has been providing clients with many of the services that family offices provide. Sources suggested it is now looking to start a dedicated service for the family office opportunity.

“Barclays Wealth in India has been providing family wealth structuring and advisory solutions for high networth and ultra high networth families in line with its global offering. This has been our core India strategy,” Satya Bansal, chief executive at Barclays Wealth, said in an emailed response to a query on the company’s plans for the family office space.

Anurag Mehrotra, of head of wealth management at Quant Capital, admitted that such a plan is in the works. “We hope to become active in the segment in another 6-9 months,” he said.

Reliance Capital had recently announced an intention of acquiring a controlling stake in Quant. Sandeep Tandon, CEO, Quant, had told DNA Money then that he would be using the money raised to expand and strengthen operations in various segments, including wealth management.

DSP Merrill Lynch is one of the key players in the wealth management space and also has a major presence in investment banking and the brokerage space. It is now said to be looking to enter the family office practice, say market sources.

This opportunity in the family office space is seen to be significant over the long-term. Karvy Private Wealth, one of the latest entrants into the field, had come out with a report suggesting that there is a total of Rs 14.10 lakh crore in private promoter wealth in India in the listed space.

“We estimate that Rs 5.3 lakh crore of such wealth will undergo the process of transfer in the next decade,” the report said. Barclays’ Bansal also acknowledged the opportunity in wealth transfers, putting the estimate even higher than others.

“The opportunity in inter-generational wealth transfers is large. The overall wealth of different promoter groups and business families would be in the range of $400 billion (Rs 19 lakh crore). Not all families are ready to for the services and it might take decades to cover the spectrum, but the potential is quite substantial,” he said.