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IIFL WM buys an “excellent business” to boost South India presence

IIFL Wealth Management (WM), a subsidiary of IIFL Holdings, has announced its acquisition of Chennai-based Wealth Advisors India Private Limited, confirming Asian Private Banker’s prior coverage of the pre-deal discussions.

IIFL WM will, subject to regulatory approvals, acquire the entire share capital and company of Wealth Advisors for a total consideration of Rs 235 crore (~US$32 million) — plus cash and cash equivalents. Wealth Advisors has approximately Rs 11,000 crore (~US$1.5 billion) in assets under advice and its acquisition “will include all employees”.

According to a press statement, the purchase represents one of India’s first few control transactions in the wealth management space. Similar agreements in the past include the transfer of RBS’s Indian private banking business to Sanctum WM.

“The acquisition of Wealth Advisors brings added value to our presence in South India, helping us become a dominant player in Chennai and areas around Chennai,” Himanshu Bhagat, senior managing partner at IIFL WM told Asian Private Banker, referring to cities such as Bangalore and Coimbatore, amongst others.

On personnel, IIFL WM’s founder, MD and CEO, Karan Bhagat iterated that the deal will bring the firm “top quality talent by way of sales and non-sales teams”.

“While most of our growth has been organic, we have always been open to align with the right partners in the business,” he continued, underlining the “commonalities” between the parties, including a strong alignment of cultures and a “highly client-centric approach”.

And according to Pramod Kumar, co-founder, director and CEO of Wealth Advisors, the merger enables Wealth Advisors to scale up and leverage the IIFL Wealth platform to forge deeper client relationships and extend the breadth of its service and product offerings.

“Moreover, IIFL Wealth has a history of entrepreneurial culture similar to ours and we look forward to continuing our sharp focus on the wealth management business, which is the core business of both the firms,” Kumar added.

A year of many changes

The acquisition of Wealth Advisors is the latest development in IIFL WM’s unfolding growth strategy, which has been progressing in leaps and bounds since the wealth manager articulated plans to raise US$110 million in shares to fund the expansion of its wealth management platform back in June. Around that time, Karan Bhagat alluded to a potential deal saying that the firm saw opportunities in Tier Two cities such as Chennai.

Subsequently, in September, IIFL WM announced its acquisition of Bengaluru-based Altiore Advisors, a data analytics fintech firm.

During the same period, group entity IIFL Investment Managers launched the IIFL-ONE platform, which institutionalises a range of investment options for HNW clients under a transparent ‘all-in-fee’ structure.

“We look forward to Mr Pramod Kumar adding value to the IIFL Wealth platform as it transforms to an advice-driven, digital, technology-enabled platform,” Himanshu Bhagat said. “The acquisition allows great inroads into clients and client segments, being complementary to IIFL Wealth, especially in our journey of IIFL-ONE.”

Meanwhile, looming even larger on the horizon is IIFL Holdings’ plans for a demerger, which is expected to see it unpack its wealth, finance, and securities units and list them publicly as three separate companies.

“This acquisition doesn’t affect the demerger,” Himanshu Bhagat said. “In fact, this deal is value added for the firm in the gain of an excellent business, annuitised revenues, and a great management team.”

As it marks the tenth anniversary of its establishment this year, IIFL Wealth & Asset Management is India’s second-largest wealth manager with US$17.7 billion in assets under management as at end-2017, according to Asian Private Banker’s India 2017 AUM League Table.

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Asian Private Banker