Julius Baer India, a subsidiary of the Swiss private bank Julius Baer, is preparing to enter the alternative investment fund (AIF) market to expand its offerings for high net worth individuals and ultra-high net worth individuals. It intends to launch an equity AIF fund initially, before adding specialised and carefully curated solutions. Julius Baer India has already applied for a license. The AIF market in India has recorded 30% growth over the past year and an annual growth rate of 38.2% over the past five years. To offer equity AIFs in the listed space, the bank plans to utilise its expertise in the equity capital markets. Julius Baer India also intends to identify third-party managers and bundle their offerings through a fund of funds route. The country’s AIF sector has total assets under management of INR8.3tn ($113bn), or 21% of the total assets under management of mutual funds. The AIF category 2 and 3 funds have a combined size of INR6.4tn, or 19% of the mutual funds market. AIFs are attractive in part due to the potential for structured credit funds to offer high yields and regular cash flows.
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Swiss private bank Julius Baer’s Indian arm is planning to launch alternative investment funds (AIFs) as part of its growth strategy.
The move also aims to add “innovation and diversification” to the bank’s existing product offerings for high net-worth individuals (HNIs) and ultra-high net-worth individuals (UHNIs).
The company, which has already applied for a licence, intends to launch equity AIF funds initially under Category 3 followed by specialised and curated solutions under Category 2(which primarily invest in unlisted companies).
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“One part of the growth strategy is to venture into new businesses, for which we have applied for an AIF licence. Our plan to launch our own AIF schemes is to bring additional innovation and diversification in our services platform for HNIs and UHNIs,” Julius Baer India MD & CEO Umang Papneja told FE in an interview.
The total industry size of the AIF sector in India is about ₹8.3 trillion as of March 2023, which represents 21% of the mutual fund industry’s total assets under management of Rs 40 trillion.
The AIF 2 and 3 categories have a combined size of ₹6.4 trillion, accounting for 19% of the MF industry’s AUM.
The AIF industry has recorded a 30% growth over the past year and at an annual growth rate of 38.2% over the past five years.
“We intend to leverage our experience in the equity capital markets to offer equity AIFs in the listed space. We will also identify third-party managers and package their solutions through a fund of funds route,” he said.
Talking about the AIF Categories 2 and 3, Papneja said investors are seeking opportunities in the unlisted space through private equity funds, even as structured credit products have gained popularity for their potential to deliver high yields and regular cash flows. Further, long-only equity AIFs (AIF-3) are also “attractive” due to their differentiated strategies compared with traditional mutual funds.
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The country is also witnessing a rise in the number of UHNIs, particularly from Bengaluru, Hyderabad and various cities in Gujarat. At present, there are about 15,000 UHNIs in India (having net assets of $30 million and above) and it is expected to grow by another 4,000-5,000 over the next five years.
Julius Baer India is looking to capitalise on this trend by ramping up its business. The wealth manager recently launched investment management services. India’s wealth sector is currently valued at $600 billion with a 12% annual growth rate, of which only a quarter is managed by professionals.