Online mutual fund investment platform FundsIndia is looking to ride India’s expanding wealth management market for its next phase of growth. Group CEO Akshay Sapru tells Narayanan V that the WestBridge Capital-backed firm aims to build one of the country’s largest wealth management platforms and scale its assets nearly fourfold to `1 lakh crore over the next four years. Excerpts:
How has WestBridge’s acquistion reshaped FundsIndia’s strategy?
FundsIndia took a new avatar in 2023 when WestBridge Capital acquired the company. It is now 100% owned by them. The business has evolved significantly in the last three years. WestBridge came in with a strong thesis on India’s wealth management industry over the next two decades. A key strategic shift under WestBridge has been the focus on building across the entire investor value chain from first-time and mass affluent investors to HNIs and ultra-HNIs.
Drawing from its experience as a large investor in banks over the past two decades, WestBridge saw how the universal banking model creates a virtuous cycle, with each business reinforcing the other. The vision now is to replicate that by building a “universal wealth manager” from India over the next 15–20 years. Beyond the original online distribution business, we added two new verticals. One is a private wealth business with in-house employees and relationship managers. The other is an omnichannel model to support independent financial advisors (IFAs), who remain a significant part of India’s mutual fund distribution ecosystem, accounting for about 20–25% of the market.
What are the plans to scale up the wealth management business?
When WestBridge came in, they asked if we can build the largest wealth management firm out of India over the next 10 years. It may not be the largest in terms of AUM, but at least in terms of new net business. So, we began ramping up our wealth management business to achieve that. We added over 400 relationship managers (RMs) in the last 12 months, which is among the fastest ramp-ups in the wealth management space.
We are also putting a lot of investment on the digital side to grow the business across the mass and mass affluent segments. As a result, wealth management is our fastest-growing business right now. We have added around Rs 6,500 crore in the last 12 months, the first year of the business. I think it will continue to be the fastest-growing business for us for another two to three years. We continue to believe that the wealth segment will grow upwards of 25% at an industry level. That’s the view we have, and we are aiming to grow a little faster than that.
Is online mutual fund business facing challenge from DIY platforms?
Our belief is that human interaction is always going to be critical. Everybody gets excited when the market is going one way, so DIY looks attractive. But in the last 15 days, the market has seen a lot of volatility. You will have these phases where the market corrects, and many DIY investors start panicking because they don’t know where to go.
We believe investing is a long-term process. We are trying to propagate some first principles in investing, which is long term and goal-based investing. They need to understanding volatility is different from risk. One of the key things we tell our advisors at FundsIndia is to keep reminding clients about these first principles. If we are able to do that well, that’s half the job done, because maximum damage happens when investors start making random, FOMO-driven decisions.
Has the market volatility reduced SIP inflows?
We haven’t seen any material change. We did have a lot of client calls coming in, but we were very proactive in communicating with clients through app notifications and emails. We had even sent out a note the day the war broke, and since then, we’ve been continuously telling clients not to react to the situation. In fact, if they had some money lying outside equities, and if their risk appetite allows, this correction of nearly 15% or more could be a good time to deploy some of that. Otherwise, this is the time to just hold your nerve and not do anything. I think that has helped. Our SIP book, even this month, has grown. We are mobilising about Rs 150 crore a month now. Over the past 12 months, FundsIndia has registered net inflows of around Rs 2,100 crore.
What are your AUM growth plans?
FundsIndia has surpassed Rs 25,000 crore in assets under management (AUM). Our core business(digital investment platform) continues to be the largest, with about Rs 12,500 crore of assets. We have drawn up a five-year plan. By 2030, we aim to become a Rs 1 lakh crore AUM firm. Out of this, about 40% will come from private wealth, 20–25% from the B2B business, and around 30–35% from online investments for retail investors. Eventually, retail will become bigger, but that is likely over the succeeding years. This is the mix we are currently seeing across the businesses.