Initiating Coverage: 360 ONE WAM LTD (IIFL Wealth Management)
17-03-2023

IIFL Wealth Management (now 360 One WAM) is one of the leading wealth management companies in India and is the investment and financial advisor in the High Net Worth Individuals (HNI) and Ultra HNI segments in India and abroad. The journey and success of IIFL Wealth & Asset Management could, in equal measure, be attributed to the commitment and tenacity of its team and conducive demographic and investment environment in the country.

Industry Overview

Wealth of Indian population is growing aided by young demographics and increasing middle class are going to drive need for financial products and investment advisors.

India has a growing number of high net worth individuals, and this trend is expected to continue in the coming years. This presents an opportunity for wealth managers to offer their services to these individuals and cater to their investment needs. As investors become more aware of the benefits of seeking professional advice, the demand for wealth management services is expected to increase. Currently wealth management industry is at INR 25 trillion in FY22, expected to grow at 13% to INR 46.7 Trillion by FY27.Top of FormBottom of Form

Rising middle and financial literacy are going to drive demand to service clients on various asset classes and investment products. Mutual funds, PMS & AIF industry are managed assets are all set to grow in higher double digits in this decade. Unorganised players and misguided information will provide players to gain clients.

Business Model

IIFL Wealth and Asset Management operate in two primary areas of financial services: Wealth Management and Asset Management, as well provide additional value added services to its clients.

Wealth Management

The company provides customized solutions to meet the unique and complex financial needs of high net worth and ultra-high net worth individuals, affluent families, family offices, and institutional clients. These solutions could include investment advice, portfolio management, financial planning, tax planning, estate planning, and other related services. % flat and distribution insert

Asset Management

360 One WAM offers a diversified suite of investment products, including alternative investment funds, portfolio management schemes, and mutual funds, covering various asset classes such as public and private equities, fixed income securities, and real estate. The company serves clients, including global and domestic institutions, channel partners such as private banks, family offices, pension funds, and retail investors in asset management segment.

Custodian Service

Custodian services involve the safekeeping and administration of assets on behalf of clients. IIFL Wealth acts as a custodian for client’s assets, like equities, bonds, mutual funds, and alternative investments. The firm provides a secure platform for holding and managing these assets, and provides clients with regular reporting and updates on the performance of their portfolios.

Lending

IIFL Wealth Management Ltd through its 100% subsidiary IIFL Wealth Prime Limited, NBFC registered with the RBI. It offers loans to fund client’s capital requirements to facilitate investments in markets, short term working capital needs, and provide them leverage for acquisitions. This segment has a Loan book size (4,472 Cr) as on 31^st Dec 2022, generating NIM of 5.3% in FY22.

Financials

ROE are better metrics to understand IIFL performance, due to lending operations of the firm. On ROE basis IIFL has been able to generate high teens with covid exception. Company has been able to generate ROE of 22.6% for FY22, increasing returns as leverage plays out and clients AUM increase. Margins will increase as higher number of clients shift to annual recurring revenue model from transaction/brokerage model.

Employee retention and compensation is an important aspect of wealth management industry as it is crucial for maintaining client service and longer tenure. IIFL has employee cost of 39.2% in FY22 (comprising fixed and variable) with 78% team leaders with tenure of more than 5 years.

Client retention is similar important variable, with attrition of clients at 2% for FY22.

	FY 22 (in Cr)	FY 21 (in Cr)	% change YoY
Revenue from Operations	1398	916	52.7%
Operating Profit	614	348	76.7%
PAT	582	369	57.5%
AUM	2,61,745	2,07,044	26.4%
Cost to Income	51.1%	53.9%

360 One WAM charges fees on AUM that is advised and managed (0.63% on Average AUM for FY22). Fees charged differ on assets under Wealth (0.53%) and asset (0.73%) management. 360 ONE has been able to constantly increase

Management

Karan Bhagat - Managing Director

Karan holds an MBA in finance from Indian Institute of Management, Bangalore and acquired his Bachelor’s Degree in Commerce from St. Xavier’s College, Calcutta. He was instrumental in building a team of experienced and talented professionals from within and outside the industry, who work with and for, some of the most distinguished wealthy families in India and abroad. He has worked for over seven years in Kotak Wealth Management prior to founding IIFL Wealth Management.

Anup Maheshwari - Co-Founder & CIO

Anup is Co-Founder & CIO of IIFL Asset Management. Anup is responsible for the investment and strategy for IIFL AMC’s business including mutual funds and Alternative Investment Funds (AIFs). He plays a key role in meeting the company's aggressive growth goals as well as product development and devising an innovative investment strategy. An alumnus of Indian Institute of Management- Lucknow, he has over 25 years of work experience in the financial services sector.

Competition

360 ONE faces competition from several listed as well unlisted firms (Anand Rathi), arms of banks (Kotak Wealth), and unorganised players. Firms Asset management arm face competition from PMS, AIFs, and AMCs operating different products.

Risks

Competition in wealth & asset management industry is increasing

Yields on AUM managed might not improve, as UNHI & HNI clients demand lower fees.

Higher client & employee attrition can have negative effect on growth and AUM.

Asset management business is dependent on return performance and product offering by company.

Asset and wealth managers need to comply with SEBI rules & regulations. Any such investment restrictions, disclosure requirements, fees charged and client protection rules could affect the company.