Avendus CEO on Driving the Firm to the Peak of the Indian Wealth Management Market
Avendus is a major diversified financial services group in India, in which US-based private equity giant KKR and one other private equity firm, are financial investors. Hubbis had the opportunity to ‘meet’ with Nitin Singh, Managing Director & CEO of Avendus Wealth Management, who joined the firm in February 2020, shortly before the pandemic hit. Nitin was speaking to us on a Zoom call from glorious Goa, sitting on a covered terrace, surrounded by splendid tree-clad hills. From this vantage point, he could survey not only the tropical landscape, but also India’s evolving wealth management market, and report on how he is working hard with Avendus shareholders and colleagues to build the firm into a consistent top tier private bank in India - a firm with a clear and intense focus on the upper HNW and UHNW community across the country, leveraging the firm’s extensive investment banking, lending and asset management capabilities, and cross-fertilisation of relationships.
Avendus was originally created by three Indian founders who set the firm up over 20 years ago, with global private equity giant KKR taking majority shareholding in 2015 in a deal sized at USD115 million.
The firm’s wealth management operation (Avendus Wealth Management - AWM) was launched in 2010, and within six years became a significant sized business within the Avendus group. Since then, the mission has been to scale up in client offering capabilities and prominence.
Nitin reports: “We are a full-service wealth management platform, with products and advisory services across all asset classes, family office services, and lending capabilities. In short everything that you expect out of a private bank.”
Euromoney Private Banking and Wealth Management Survey rated Avendus Wealth Management as the fourth-best private bank overall in India in February this year, and also among the top three for the UHNW market of USD100 million AUM and above.
“Our mission is to become one of the top three trusted advisors within the country in the HNWI and UHNWI segments, targeting the five, 10, 20, and 100 million dollar plus customers because that’s the ecosystem that we’ve historically dealt with.”
Nitin explains further that Avendus decided not to compete in the mass affluent segment, which he describes as characterised by investors with USD1 million or less investible income, nor does Avendus aim to compete in the lower tier of HNWIs. “We really focus only on anyone with USD 5 million or more to invest and then right up to UHNWIs with USD 30 million, all the way up to many hundreds of millions. We also cater to family offices with upwards of USD 100 million to invest.”
Aligning the stars
He explains that the group’s extensive IB expertise, its asset management lineage, and its lending capabilities offer broad access for the AWM operation to numerous business owners and entrepreneurs across India, especially in new industries where so much wealth creation has been happening.
He adds that with powerful, forward-focused shareholders who have broad capabilities and reach, Avendus is one of the market leaders in investment banking in India, especially on the digital technology, consumer and the new business spaces and that the firm is immensely strong in the healthcare space as well. “We also have a very large asset management business, and we are one of the pioneers within the hedge fund industry in India,” he reports.
Nitin explains that there are several opportunities to cross-sell between the different Avendus business segments, and this has prompted the firm to launch the “One Avendus” proposition to better serve its clients. “We can not only offer our clients a deeper and better range of services and solutions, thereby cementing relationships, but we can extend to more customers and of course expand the revenues as a result.”
Nitin joined Avendus in February, shortly before the world was turned upside down by the pandemic. He had enjoyed a 20-year career beforehand in wealth management, many of those years with Standard Chartered and HSBC Private Bank in London and in India. His last role before taking the helm at Avendus was as Managing Director & Head of the India Wealth Management business at Standard Chartered Bank. Prior to that, he was global head of fund selection for HSBC Private Bank, based in historic St. James, during which time he was almost weekly travelling to Switzerland as part of the job.
“It might have been nicer to join without the chaos of the ensuing pandemic, but I am delighted to be here, pleased with the progress to date, and hope and expect India to resume its amazing growth story before long. In fact, the first 3-4 months of the pandemic gave us the chance to take a deep look into our business and assess gaps, which of course led to us identifying growth opportunities. It literally allowed us to hit the ‘pause and recharge’ button, and helped me get the team together to strategise and build out our fundamental growth levers - we like to call these the “building blocks” of our future growth story.”
A reboot year
“This is a reboot year for us,” he reports. “Our priority is to craft our growth story around six building blocks. First among these is our market leadership in distributing alternative investments. We want to continue to be the leader in this space with ongoing innovation, made possible through our extensive in-house research and our industry network of 100+ PE and 50+ VC funds.”
“Second, we want further leverage our IB franchise to enhance the way we serve clients. We are looking at client relationships at the franchise level to deliver bespoke, joint IB and WM solutions to customers - this is essentially an extension of the One Avendus philosophy mentioned earlier.”
“Third, we are working hard to scale up our Investment solutions and family office offerings as well as our direct equities capabilities.”
“At number four is our new growth lever of ‘Wealth lending’, which we launched very recently to plug this critical gap in our earlier range of offerings, where we aim to be the lender of choice for our target segment of clients, especially given our deep understanding in the listed and unlisted space and our strong connect with customers. We have recently made leadership hires across our family office, equity, investment solutions and wealth lending verticals. We have also reorganised teams internally, and are rolling out reinvigorated propositions on all of these offerings.”
“Our fifth, and perhaps our most crucial lever - in terms of impact on customer experience and our internal efficiency and productivity – is our plan to build a cutting-edge technology and operations stack. We are revamping our digital capabilities in a big way, over the next year, to create an operating model that makes user journeys seamless, and improves RM’s ability to better serve clients. These initiatives are being spearheaded by our new COO, who brings with him 21 years of rich wealth management experience, and a strong credential of delivering superior customer journeys.”
“Lastly, we are also focussing on expanding and upskilling our sales talent & reach to derive maximum benefit from the product & technology investments being made. We are strategically using the dislocation in the market to identify top talent with deep domain expertise, and are looking to double our RM count by mid-2021. We are also focussing on upskilling and enhancing productivity of our existing team through focused coaching and training interventions.”
The holistic approach
Nitin describes the Avendus USP. “We always aim to be trusted advisors to our clients, with a holistic approach that is insights-based, and expertise-driven,” he reports. “Our DNA is first and foremost to be close to our clients and understand very accurately what they want, and second to ensure every tailored product or solution we bring to the client is very high quality, based on our own internal research, and strong conviction. Simply put, we only offer what we both fully understand and believe in.”
He adds that Avendus not only boasts of a very robust sourcing engine, given the very large network of the Avendus group franchise, but has successfully built several internal frameworks and guard rails to ensure rigour in the curation of products and ideas, as well as to ensure robust advisory processes.
“These frameworks help us offer really top-class products and solutions to our clients,” he says. “As a full-service Wealth platform, we can offer products and advisory across asset classes and family office services, as well as lending solutions. We have been especially proud of how we have built depth in recent years and some truly differentiating capabilities.”
One such differentiation is Avendus’s capability on the alternative or private market investments side, where he says the firm has been able to literally create a market and build an ecosystem.
“We are in fact, often, the first port of call for entrepreneurial fund managers and start-ups raising capital. However, we only work with high quality managers or businesses that focus on segments that we have strong conviction in. We have a stringent process in place to curate future winners in India’s private markets. Out of the 200 + private market deals and funds we have evaluated over the years, just over 30 made it to our list of client offerings. The funds that do make it to our platform continue to work with us year on year, deepening our relationship and helping us co-create interesting opportunities for clients,” says Nitin.
“Currently we are very bullish on the digital and technology space in India. We think this needs to become a significant chunk of clients' alternative asset portfolios, as it has the potential to deliver multifold returns over the next 5-7 years.”
“We have built a deep expertise in private assets and private markets in the past several years,” he explains. “We have seen most large family offices in India now going the global route with private markets becoming a larger portion of their portfolios. Gone are the days when this market was limited to the traditional fixed income and equity-type investments. The appetite for alternates, such as private equity and venture capital, or even venture debt has risen significantly, and we are right at the core of that ecosystem here.”
Advisory and expertise
The second key area in which Avendus has expanded its prominence is the firm’s investment solutions and advisory capability. “Advisory in India has only been around for the last two years and is rapidly evolving amid changing regulations and customer preferences.”
“This used to be peripheral,” he reports, “and it used to just chug along slowly, but it is really picking up pace now at the firm. And as investors emerged in June from the shock of the pandemic and market volatility, we have been able to take advantage of this with a range of carefully selected ideas, all based on products or opportunities we truly understand and believe in. So, across the listed equity space or the debt space or with regard to various other differentiated products, customers are increasingly willing to really put money back on the table.”
Nitin recalls the key shifts that have taken place this year for the HNW and UHNW type of private clients. “They naturally turned risk-averse from March through June, especially avoiding equities, preferring fixed income to obtain whatever yield available, and also gold and gold ETFs. Diversification also became a key focus, and we saw greater interest in the private asset markets.”
After June, there was a return of appetite for listed equities, with investors becoming more selective, opting either for a direct stock portfolio or a small set of professionally managed funds. Within fixed income, Nitin and colleagues have seen demand rise modestly for high quality curated credit via the Non-convertible debenture (NCD) and Market-linked debenture (MLD) route. And they have also witnessed greater interest in REITs and gold, which have both become standard elements within current asset allocation.
“Moreover,” he reports, “investors are opening up to the idea of differentiated products like absolute return strategies, and there is also significant interest cropping up in offshore investments as wealthy investors seek to bring greater diversification to their portfolio.”
Family offices in India are looking to diversify their portfolios internationally across asset classes, geographies, currencies and commodities, he observes. “We anticipate the evolution of new products will provide investors with better access to offshore investment products and the global marketplace,” he says. “We are also seeing rising interest and availability of alternative investments, for example in private equity and the venture capital space, both of which are gaining momentum here.”
Nitin comments that in these uncertain times, he believes it is most important to stay nimble in the face of uncertainty and handhold clients through the volatility.
“That is what we have been doing,” he says, “as well as really working even harder to identify relevant and interesting ideas for them. For example, we have been working on the Covid survivors in equities, structured fixed income opportunities and mispriced debt, especially when the Franklin fund fiasco was unfolding. And our proprietary advisory frameworks and methodologies for equity and debt have allowed us to stay clear of problematic funds and earned us a growing reputation. We have enhanced our expertise in both gold and offshore investments and have brought clients more and better quality private deals.”
The rise of private market investments
Nitin sees more interest in the wealthier segments for private investments and comments that India’s digital revolution has been taking place apace, with about 37 unicorns built in only the past few years. “What we see is that in India, foreign institutional and private equity investors came in early,” he explains, “and they invested smartly in private deals, and made a lot of money, while Indian investors stood back, but they now no longer want to be left on the side lines, and are prepared to commit to these private deals. Alternatives, private market access, bespoke opportunities are all on the table, especially for those with investment surpluses of at least USD10 million and above.”
He elaborates that at the same time, the firm has been building a greater breadth and depth of mainstream and other opportunities. “We estimate that somewhere around 70-75% of the investment wallet is still focused on the more traditional asset classes, and that is also where we are aiming to do considerably better than our peers have done in the past. Clients expect differentiation and added value today. And we need to then tailor our delivery and approach to different types of clients to suit their wealth goals and their expectations.”
Growth despite headwinds
Nitin is working hard to build the AWM operations despite regulatory pressures on costs and margin compression across the industry.
“Indian wealth managers are facing a challenging environment due to regulatory intervention and competitive pressures,” he reports, “and margin compression means annual margins on AUM are today about 40-50 basis points, and only a couple of years ago were nearer to two-three times that.
There is more pressure now on the quality and integrity of the product selection, the advice and the execution for clients, as clients are more demanding and discerning, and there is rising competition from digital upstarts.”
All in all, Nitin is pleased with Avendus’s performance through the pandemic since he came on board. “Despite all the initial issues caused by Covid,” he says, “I can actually say I am extremely happy about where we sit today. The last few months have been an ideal opportunity to reboot the business, and we are seeing the early results. Income growth has been faster than expected, morale is high, and I see a significant opportunity to win market share of clients and high-quality talent in the months to come. The board and founders are fully behind the team in terms of implementing the vision of building a long term high quality sustainable platform aimed at being a top 3 trusted advisor in our targeted segment/s with AUM and revenues expected to grow 4-5 X over the next few years.”
Nitin Singh is Managing Director & CEO at Avendus Wealth Management. He has over two decades of deep industry knowledge and expertise in private banking, asset management and wealth management. His role and responsibility at Avendus Wealth Management include leading a team of high performing private bankers, product specialists, portfolio managers and strategic business functions to serve clients across geographies in India.
Nitin joined Avendus from Standard Chartered Bank where he was Managing Director & Head of the Wealth Management business, that comprised of 300+ team members. In his tenure as the head of the business, he reports he had a significant impact on the Wealth Management franchise in India for Standard Chartered Bank, by setting a clear vision and focusing on relentless execution. That business recorded assets under management and custody of USD14 billion in 2019. Nitin was also on the Board of Standard Chartered Securities India and a member of the Country Management Team for the bank.
Prior to joining Standard Chartered, he was at HSBC Private Bank as the Global Head of Fund Strategy, responsible for long-only mutual funds and ETF product offerings. At HSBC, he managed an AUM of USD40 billion. He established the global funds desk in London with responsibility for fund selection, strategic partnership programs with asset managers, and led the distribution efforts for mutual funds and ETFs across the Private Bank customer base, globally. He was also a member of HSBC Private Bank Global Investment Committee.
Nitin is a Postgraduate from Indian Institute Management, Bangalore with a graduate degree in Economics.
“I grew up across numerous cities in India as my father was in the Indian army,” he reports. “Today, I am happily married, and we have an eight-year old son, a huge football fan, and a small family dog. I used to play some football on weekends, but with the pandemic of course I have not played for eight months. I am a huge Liverpool fan.”
He is also a self-professed foodie, with a love for traveling around the world to try new cuisines. “London actually is my favourite city in the world,” he reports, “ I was without my family there for the roughly 15 months so I could spend time enjoying some wonderful eateries and some very fine restaurants. Our office was in the lovely St James Court area and I lived in Westminster. I loved walking around the city and just finding interesting places along the way. Japanese is my favourite form of cuisine, and one of my favourite trips is to go to Tokyo and spend a few days there exploring all the small restaurants.”
The Zoom call with Hubbis took place from a remote house where Nitin and family were staying for a month and from which he was working intently. He spoke from a wonderful open-sided building sitting high up overlooking the pool and the jungle and hills beyond. “I am also a lover and collector of gin,” he said on closing the discussion, “and Goa has developed a reputation for some fine gins, one of which I will probably partake of later today, of course purely for medicinal reasons, to defend myself against the mosquitoes!”
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