The Wealth Wallahs
The Wealth Wallahs
Shreyasi Singh
First published in India 2016
© 2016 by Shreyasi Singh
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers.
No responsibility for loss caused to any individual or organization acting on or refraining from action as a result of the material in this publication can be accepted by Bloomsbury or the author.
The content of this book is the sole expression and opinion of its author, and not of the publisher. The publisher in no manner is liable for any opinion or views expressed by the author. While best efforts have been made in preparing this book, the publisher makes no representations or warranties of any kind and assumes no liabilities of any kind with respect to the accuracy or completeness of the content and specifically disclaims any implied warranties of merchantability or fitness of use for a particular purpose.
The publisher believes that the content of this book does not violate any existing copyright/intellectual property of others in any manner whatsoever. However, in case any source has not been duly attributed, the publisher may be notified in writing for necessary action.
BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc
E-ISBN 978 93 86141 97 2
Bloomsbury Publishing India Pvt. Ltd
Second Floor, LSC Building No.4
DDA Complex, Pocket C – 6 & 7, Vasant Kunj
New Delhi 110070
www.bloomsbury.com
Created by Manipal Digital Systems
To find out more about our authors and books visit www.bloomsbury.com.
Here you will find extracts, author interviews, details of forthcoming
events and the option to sign up for our newsletters.
For Agastya,
all the wealth I will ever need
Contents
Acknowledgements
Introduction
Up A Beanstalk
Chapter 1Fields of gold
Chapter 2Midas’s new crucible
Chapter 3The perfect storm
Breaking New Ground
Chapter 4Shh, I’m rich!
Chapter 5The colour of money
Chapter 6Dividends of thrift
Chapter 7Do-gooders or reluctant philanthropists?
House Of Wealth
Chapter 8Shedding the past, wearing the future
Chapter 9Great expectations
Chapter 10The anatomy of choice
Chapter 11Age of knowing more, seeing clearly
Chapter 12The relationship roulette
The Rainmakers
Chapter 13A game of odds
Chapter 14Soliloquies
Chapter 15Alchemy of ambition
Chapter 16Chessboard
Chapter 17Blueprint for growth
Chapter 18Client Sutra
Chapter 19Rules of engagement
Chapter 20An eye on the future
Acknowledgements
Writing a book isn’t a solitary pursuit. If it takes a village to raise a child, it almost needs a galaxy to tell a good tale. The author can lay claim to the vision but the glory belongs to many others as well.
When I started to think about who I should thank, the list seemed endless. It’s difficult to cram gratitude into a page but this book couldn’t have been written without the help of a special few.
I would like to start by thanking my publisher Praveen Tiwari, and the entire team at Bloomsbury, especially Nitin Valecha and Madhumita Mookerji for their steady support, incisive feedback and good vibes. Praveen, you’re a rock.
Thank you to Avinash Thadani, Aatif Lone and Karno Guhathakurta for the striking cover. I love it.
The book wouldn’t have been possible without the interviews and conversations I had with so many entrepreneurs, senior professionals, business analysts, respected journalists and industry stalwarts. Your stories helped me tell mine. For your time, candour and sharing your fascinating journeys, you have my deepest gratitude.
Little did I know that a routine cover story I did on IIFL Wealth as editor of Inc. India would end up as a book two years later. Its founders’ journeys of becoming wealth managers to some of India’s largest fortune builders helped me weave together so many fascinating aspects of the world of wealth that lies beyond statistics and numbers. I appreciate the time, research support and insights of the team at IIFL Wealth. A special thank you to Ronak Sheth for his help.
I live off the enthusiasm of others. To my friends and extended family, thank you for being excited on my behalf. Many of you had no idea what I was writing about but were certain it was bound to be great. The usual writer’s agony became yours as I ranted and whined. For those who have been waiting for the book to be out, your signed copy is on its way. Grateful for the joy and fun you bring to my life.
To my bosses, and cherished mentors, Anuradha Das Mathur and Pramath Raj Sinha: Your encouragement and support pushes me to do more and be better, every single day. I am privileged to have you in my life.
To Amrita Dasgupta and Madhumita Nandi Srivastava, a special mention. I am touched by the hours, effort and love you have given me, and this book.
My thanks to Rita Saha Ghosh, Dhananjay Rai and Anshul Sharma at Skymet Weather. Even though I will miss working out of your office, Jatin, I am sure you are happy to have that extra workspace back!
My biggest appreciation is reserved for my pack of editor friends: Shalini Dagar, Tejeesh Nippun Singh Behl, Ira Swasti and Preeti Singh. They read early drafts, poked holes in my structure, pushed me to think harder and helped me focus. What’s more, they did it with equal parts brutality and affection.
Preeti Singh, for your talent and your friendship, I owe you for life. My favourite part about writing this book has been our midnight editing sessions, with much laughter, single malt sample shots and your formidable repertoire of snide comments. I won’t write another book if you are not editing it.
To my in-laws and my sister-in-law, thank you for taking Agastya on long holidays and short weekend breaks so I could work in peace. Your support made all the difference. To Aditya and Terniza, your positivity and encouragement are such a large part of everything I do.
Most of all, to my parents, my husband Jatin and our son Agastya: Thank you for putting up with me, even when I was at my distracted and irritable best. I hope seeing the book in stores will make up for some of my bad behaviour. Nothing would be possible, or makes sense, without the four of you.
Introduction
For too long, wealth management has been a secretive, covert business. Clients have usually been cagey about discussing their net worth, much less speaking frankly to others about how they manage it. Private bankers and wealth managers are even more reticent, restrained as they are by confidentiality agreements and the sensitivity that comes with the territory.
In fact, the old glamour of the wealth management industry came from it being inaccessible and obscure. Such exclusivity has its origins in this being a cloak-and-dagger business. Much as people tried to “hide” their money, those who managed it were also best kept hidden. It was a world tighter than a moneylender’s fist.
This book is an attempt to shed light on a subject that has long been confined to anonymous surveys and research reports where rich clients and their wealth managers are often only represented as statistical data.
It’s an intricate business. Managing the money, personal quirks and risk appetites of some of the country’s most successful and wealthiest people makes i
t a job rife with challenges (and plenty of interesting stories).
At a time when there is an unprecedented “wealth effect” at work in India, understanding how freshly-forged millionaires think about their wealth and manage their bounty provides a rich repository of new insights.
As we see people around us become wealthy, and as they find themselves richer than they had ever imagined, the way Indians perceive affluence and those who possess it is also changing. At the heart of this narrative are the country’s new wealthy.
Based on extensive interviews, the book examines some of these changes. It is in no way exhaustive but does offer a glimpse into a dynamic world. What do their first few millions mean to the first-time rich? Do their attitudes to money mark a departure from the way the traditionally wealthy have looked at their fortunes? How, in turn, do their attitudes influence and mould the views of those on the other side of the golden fence?
As the world’s fastest-growing economy tries to get in step with the rest of the world, conflicting — almost schizophrenic — views around wealth and the wealthy indicate important cultural, social and economic shifts within India itself.
The book also explores how the new wealthy manage their substantial fortunes. Who do they trust to do this? How do they pick their advisors and how are these relationships structured? What does it take to win the confidence of smart and shrewd business builders? In turn, has their rise as significant wealth creators changed the nature of India’s fledgling wealth management industry itself?
Unspooling the story through IIFL Wealth’s eight-year-old journey as one of India’s leading wealth management firms offers a unique vantage point. What makes its climb up the ladder more fascinating is an insiders’ perspective of being financial confidantes to some of India’s most successful entrepreneurs and professionals.
I first heard about IIFL Wealth, and met the founding team, in early 2012, while I was the editor of Inc. India — the Indian edition of Inc., the American magazine on entrepreneurship. For a story I filed on them later, I met more than two dozen of their clients. Each of them had their own fascinating story to share. They were entrepreneurs that magazines such as the one I was editing often put on the cover.
Collectively, the treasure of insights from the clients was the “after” story of the entrepreneurship boom. It was the happy albeit uncertain corollary of entrepreneurial and professional success. Most reportage on entrepreneurship is limited to the process of building the business. Few articles or books focus on what happens after. When people do write about the affluent, it is to gush over their material purchases. This book allowed me to tease out and explore an entirely new set of insights.
IIFL Wealth’s story also ties in with strong forces beyond our borders and how global currents in a post-2008 world are shaping a young industry in India. The tremors of the financial crisis exposed deep faultlines in the financial services industry but the cracks also created a fresh topography of opportunities.
In the end, much like the stories of their clients, IIFL Wealth’s journey tips its hat to the remarkable success that smart timing, entrepreneurial dynamism and a bit of luck can script in today’s India.
Part 1
Up A Beanstalk
Chapter 1
Fields of gold
The world of entrepreneurship is a waste bin for the best laid plans.
In December 2014, Raghunandan G and Aprameya Radhakrishna, co-founders of app-based cabs aggregator TaxiForSure, were busy thinking up strategies and making expansion plans that they would not have a chance to implement. Raghu, as he is popularly known, was working out of cafés across sunny California, while Aprameya was holding the fort in the start-up’s buzzing office in Bengaluru. In the months leading up to that December, they had aggressively increased their customer base although this had bled their reserves.
At that time, TaxiForSure was one of India’s hottest young companies, having raised $26 million ( 174.98 crores)1 from venture capitalists such as Accel Partners, Helion Venture Partners and Blume Ventures since it started in 2011. It was also locked in a three-way battle with Ola Cabs and Uber — both popular app-based aggregators as well — to capture market share of India’s rapidly changing taxi business.
Raghu was in Silicon Valley through November and December to raise about $200 million ( 1,334 crore) from investors to power this high-stakes, cash-burning contest and fuel TaxiForSure’s growth ride.
On 5 December 2014, a young woman was allegedly brutally raped by an Uber driver. That put a rude brake on those plans. Along with Uber, the Delhi Police banned all app-based taxi aggregators from operating in Delhi. A few other states followed suit, leading to several weeks of regulatory chaos and doubts about the future of these companies in India.
The ambiguity sharply changed the tenor of conversations in investor circles in Silicon Valley. Enthusiasm gave way to deep caution. From a hot start-up, TaxiForSure quickly became almost untouchable. They were forced to bide their time. Investors didn’t want to take a company that was passing through such ambiguity to their Investment Councils.
The new circumstances quickly shaped a different set of choices for Raghu and Aprameya — either raise only a part of the amount they needed and wait out six to eight months for the storm to settle, or take up the feelers for acquisition being sent by both of their dominant competitors, Ola Cabs and Uber.
‘We weren’t really planning to sell. As founders, you never want to sell to a business rival but things started to move very, very quickly,’ Aprameya remembers. The cash in their holding company Serendipity Infolabs was running out and their main competitor Ola Cabs — high on a $210 million ( 1,401 crore) fund raise by Softbank and its existing investors such as Tiger Global, Matrix Partners India and Steadview Capital in October 2014 — had cranked up the heat. By the end of January 2015, Aprameya says, they already had an offer from Ola.
The dilemma about right and wrong began jostling for space with the deal’s personal impact — coming into a large tranche of wealth. ‘Investor valuations are notional paper money. Converting that to actual money is a dream everybody has but you’re never certain it will play out that way,’ says the 35-year-old.
Not that their wealth felt tangible even then. ‘You don’t really know what that kind of money feels like. Both of us come from middle-class backgrounds, and if you can go to a nice restaurant every weekend, or can easily afford the holiday you’ve planned, that is enough. It’s the maximum you’ve ever wanted and the salary we were paying ourselves covered that,’ he observes.
Ola Cabs completed its acquisition of TaxiForSure by March 2015, making it one of the largest internet space transactions in India till then. The deal was also remarkable for the accelerated journey of TaxiForSure’s young founders. They were exiting their business less than four years after they started it, something unheard of even in the fast shape-shifting world of internet start-ups.
The co-founders are estimated to have become richer by “several tens of crores” — newspaper reports peg it anywhere between 136 crore — 220 crore ($20.4 million - $33 million) each. Both also hold a small share in Ola that in its last fundraising round in November 2015 was valued at $ 5 billion ( 33,367 crore).
The money from the Ola transaction came in around 15 March, 2015. ‘I opened my bank account on my mobile, and couldn’t even comprehend the figure,’ Aprameya laughs. It took some time to count from units, tens and thousands and put imaginary commas to make sense of the number, he recalls. ‘When I showed my mother the bank statement, she was worried I would get enemies and told me I shouldn’t stop for strangers when I was driving,’ he tells me with a smile.
The sudden explosion of riches was overwhelming, he admits quite frankly.
Even more seriously, there was an immediate need — to manage this wealth. The money hit his bank account with only sixteen days left for the financial year to end. It was important to get his tax planning right before the end of the month. Could help be at hand to dea
l with his problem of plenty?
Dial A for advisor
The world’s best consulting and financial services companies go to recruit ambitious, smart managers at IIM Ahmedabad, Aprameya’s alma mater. Yet the young entrepreneur confesses that up until March 2015, he had never been introduced to, or thought about, the concept of wealth management. It had never come up in their management curriculum and almost none of his friends from business school had taken up such a role. Almost sheepishly, he admits to thinking that all the rich did was buy things.
His company’s transaction had made big news. Soon enough, a swarm of wealth managers, financial advisors and private bankers — an entire new universe of people — came calling on him with ideas for equity investments and tax structures. He hadn’t expected this deluge and hard sell. But he didn’t have the luxury of time to linger on a decision — he had to learn fast.
Aprameya says that from the several discussions he had with financial planners and wealth advisors, he figured out soon enough that money wasn’t difficult to make if you had the surplus to invest in an economy as promising as India. Many of the people he had met had broadly similar investment ideas.
Dressed in a faded, green T-shirt, blue jeans and sandals when we met at The Ritz-Carlton in Bengaluru last August, Aprameya fit the bill of new-age entrepreneurs who wear their affluence lightly.
He eventually made his selection of wealth managers based on simpler filters as well. Karan Bhagat, Vinay Ahuja and Rinku Bakshi of IIFL Wealth seemed a lot less “suited-booted” than the others. They were easy-going, frank and straightforward, albeit new to the business of wealth management. What also appealed to Aprameya’s entrepreneurial mind was their ability to cut to the chase.
IIFL Wealth, the firm Bhagat, Ahuja and Bakshi represented, was also somewhat familiar. It had briefly helped TaxiForSure manage its corporate treasury.
The Wealth Wallahs Page 1
