By Netty Ismail SINGAPORE, Bloomberg
Merrill Lynch & Co., the third- largest money-manager for the rich, plans to double its business managing money for wealthy Indians living at home and overseas this year.
New York-based Merrill’s private banking unit, with about US$1.6 trillion of assets under management, plans to double the number of financial advisers in Mumbai, New Delhi, Calcutta, Chennai and Bangalore this year, said Rahul Malhotra, who oversees the bank’s business for its Indian clients.
Merrill is vying with UBS AG, Citigroup Inc. and other private banks to manage the wealth created in India, the world’s second-most populous nation, where growth lags behind only China among the top 15 economies. India is set to lead private banking growth for Merrill in Asia, Malhotra said.
“Asia is the fastest growing region and within Asia, India is firmly in the driving seat in making that happen,” Malhotra, 41, said in an interview in Singapore, where he is based.
About 83,000 Indians had assets of more than US$1 million at the end of 2005, up 19.3 percent from a year earlier, a study by Merrill and Capgemini SA showed. The nation’s millionaires held US$290 billion in assets at the end of 2005, accounting for 3.8 percent of total wealth in the Asia-Pacific region, according to the study issued last year.
Merrill employs more financial advisers than any other private bank in India, Malhotra said. He declined to say how many. The bank plans to open as many as 20 offices in India in three years as it expands into a dozen cities, including Pune, Jaipur, Chandigarh, Ahmedabad and Ludhiana, he said on March 9. The assets Merrill manages for Indian clients in the country and overseas will grow as much as eight times in three years, he said. He declined to provide details of assets under management.
Merrill has been expanding its private banking business since it increased its stake in its Indian investment banking and wealth management venture with DSP Financial Consultants Ltd. to 90 percent from 40 percent in December. Merrill paid DSP founder Hemendra Kothari US$500 million in the transaction.
Malhotra joined Merrill six months ago, having spent 20 years at Citigroup, where he last headed retail operations in the Asia-Pacific region. Merrill said in August it hired nine people, including advisers from ABN Amro Holding NV and Citigroup, in Dubai and Bahrain to win business advising rich Indians in the Middle East.
There are about 22 million Indians living outside their country owning more than US$350 billion in assets, of which as much as US$8 billion can be invested annually, Malhotra said.
“It’s a very large and affluent segment,” he said. Merrill, which has offices in the U.S., U.K., Singapore, Hong Kong, Dubai and Bahrain to cater to these clients, is “putting in place a global footprint.”
Rising stock markets and record mergers and acquisitions have swelled the wealth of private clients. India’s benchmark stock index has more than doubled over the last three years, reaching a record 14,652.09 on Feb. 8. The index has fallen 12 percent since its all-time high.
New York-based Goldman Sachs Group Inc., which ended a 10- year brokerage alliance with Indian billionaire Uday Kotak about a year ago, said it plans to build an asset management business in India as it expands independently. Morgan Stanley said last month it will pay US$425 million to buy out its joint venture in India with JM Financial Ltd. and will build its own private wealth management business in India.
“It’s a very competitive space,” Malhotra said. “Still, there is no one player today who controls and manages a large percentage of the market share. It is fragmented.”
Merrill will start distributing insurance products to its private clients in India, he said.
India’s US$854 billion economy, the fourth-biggest in Asia, may expand at a record 9.2 percent in the year ending March 31, following a 9 percent gain last year, according to the government’s statistics office, making it the world’s second- fastest growing major economy after China.
Merrill was the third-largest money manager for the rich worldwide after UBS AG and Citigroup Inc., according to a survey published in June by Scorpio Partnership, a wealth-management consultant in London.
The number of millionaires in the Asia-Pacific region rose 7.3 percent to 2.4 million last year, outpacing the 6.9 percent increase in North America and 4.5 percent gain in Europe, according to the report by Paris-based Capgemini, Europe’s largest computer services company, and Merrill.