The
number of ultra-high networth individuals (UHNIs) having an
investible surplus of over Rs 25 crore rose 16 per cent to 1.17 lakh
last fiscal, and this is estimated to triple to 3.43 lakh in the next
three years, says a report. As for the underlying wealth held by this
uber rich grouping, which also includes professionals having an
annual income of over Rs 3 crore, grew 21 per cent to Rs 104 trillion
(Rs 104 lakh crore), and will grow four times to Rs 408 trillion in
the next three years, says a wealth report by the Kotak group and
Ernst & Young. "There has been an impressive rise in wealth
creation and will only increase in the years ahead. Growth in the
underlying wealth will outpace growth in the number of UHNIs,"
consultancy firm E&Y partner Murali Balaraman told reporters
here. His colleague Abizer Diwanji said from the societal point of
view, managing this growth in the number of the rich people will not
cause any tensions as economic disparity is an "accepted norm"
in the country. Balaraman said the firm, which partnered with the
Kotak Wealth Management to launch the report, extrapolated available
economic data to arrive at the current number of UHNIs, their wealth,
as also the estimates going forward. Even though the rising criticism
of the country going the crony capitalist way and questions over
wealth creation by the few dominating public discourse, Balaraman
said the report did not devote any attention to how the wealth was
created. Of the UHNIs, 150 individuals and another 15-20 companies
closely associated with the segment like those selling luxury brands
and wealth managers, were interviewed to analyse how the wealth gets
allocated to different uses like leisure, travel, investments and
philanthropy. The interviews, done in March before the outcome of the
general elections, pointed out to much optimism on the economic
environment among the UHNIs.
Diwanji
said because of this, there has been an increase in spending to the
tune of 44 per cent in FY'14 from the 30 per cent in FY12. He said
even though investing in real estate continues to be a favourite
avenue, allocations to equity are also growing and grew to 38 per
cent in FY14, up from 35 per cent the previous year. Kotak Mahindra
Bank joint managing director C Jayaram said the propensity towards
equities will only grow now on given the changes in the tax laws
governing fixed income investments, which was a favourite earlier, in
the budget. There has also been a surge in gold investments during
the year, Balaraman said. On the philanthropic front, 60 per cent of
those surveyed said they would pay to charities while planning their
annual expenditure. Balaraman said of the UHNIs, the professionals
are hands-on with their contributions and generally come up with help
beyond the donations to ensure the success of the aim, while those
who have inherited the wealth stop only at making the contribution.
In investments, there has been the emergence of a new asset class as
UHNIs have started investing in private equity funds very sizeable.
Over 26 per cent of the surveyed UHNIs said they have private equity
investments, with real estate and IT being the key focus sectors,
while e-commerce and pharma catching up.
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