Wealth manager Kotak Mahindra will
use its tie-up with Sumitomo Mitsui Banking Corporation (SMBC) to
create a bridge between wealthy Japanese savers and India’s
capital-hungry fund industry.
SMBC completed the deal last month
to acquire 16.4m shares in Kotak Mahindra, equivalent to
approximately a 4.5% stake on a post-issue basis. Estimated to be
worth almost $300m, the transaction is thought to be the first
equity investment by a Japanese bank into India.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
Bridging
wealth
TV Raghunath, head of group
strategy at Kotak Mahindra, said the idea is to build a bridge
between the high savings, low yield economy in Japan and the high
growth, high yield Indian economy.
“There is no specific bridge
between Japan and India at this point in time. This is unlike
Europe and India, or US and India, where funds have already been
set up to tap into Indian markets,” he said.
“This is not so much about the
benefit it has for Kotak’s wealth management business, as compared
to the ability to tap wealthy individuals in Japan to participate
in the Indian wealth story,” he said.
Boston Consulting Group estimates
Japan’s wealth pool sits at $15trn with almost 76% of its wealth
held by households with less than $1m.
Kotak’s challenge will be moving
Japanese investors beyond their tendency to only favour Japanese
stocks and on from cash and deposits towards different asset
classes. BCG estimates Japanese investors hold 61% in cash and
deposits; 27% in bonds and 12% in equities.
Kotak tests institutional
demand
Raghunath also sees huge potential
for the development of institutional funds to finance Indian
infrastructure and projects.
Kotak’s wealth management arm claims to provide financial advice
and manage wealth for a third of India’s top 300 families and serve
3,000 private clients. It would not disclose assets under
management figures but has offices in 13 cities across India.
Kotak and SMBC have also entered into a memorandum of
understanding to explore opportunities arising from cross border
business, investments and trade flows, with a substantial focus on
the India-Japan corridor.
Related India news
Indian business models: a balancing act
