Most ultra HNIs are below 40 in India: Jaideep Hansraj, Kotak Mahindra Bank

In a chat with ET Now, Jaideep Hansraj, Head Wealth Management & Priority banking, Kotak Mahindra Bank, says these ultra HNIs are from tier one and tier two cities like Ludhiana, Pune etc. Edited excerpts

ET Now: Your report talks about the number of ultra HNIs increasing in the year FY16. What exactly has led to this increase?

Jaideep Hansraj: From a pure number point of view what was 137,000 last year is about 146,000 this year which is a 7 per cent increase in number of individuals and of course the net worth of these individuals has also gone up during the same period.

A lot of this networth is also calculated on the basis of liquid assets etc. etc. So how much of it is from a pure investment point of view is again important. As we mentioned in the report, the percentage which goes into investment and into savings is actually a far lesser number obviously.

ET Now: Most Ultra High Net worth Individuals (UHNIs) are below the age of 40. It seems like the young are getting richer in India and that comes out quite clearly in your report.

Jaideep Hansraj: That is right. If you look at it the way in which the Ultra HNIs are broken up is actually a combination between the inheritors and whether it is a first generation entrepreneurs or the people who are CEOs etc. So I am actually not so surprised about the fact that there are people who are under 40 in this particular space but yes to answer your other question, the wealth creation which is happening is significant in India and again if one looks at the report carefully, you are really talking over the next four to five years of this number doubling from 146,000 Ultra HNIs to close to 295 or 1,000 individuals.

ET Now: Also these ultra HNIs are from tier one and tier two cities like Ludhiana, Pune etc. This shows demographic divergence?

Jaideep Hansraj: Absolutely, one is seeing that and I am in the thick of it or we are as a firm in the thick of it you are a bang on whether it is Ludhiana, whether it is in Indore, whether it is in Nagpur, whether it is a Bhubaneswar which you would not associate with Ultra High Net worth individuals, you would not associate with serious wealth but clearly the tier two and tier three towns are showing a lot of increase in UHNIs as we call them.

ET Now: Most of the rising rich are investing in equities, almost 39 per cent of their savings. Is that an interesting trend?

Jaideep Hansraj: Yes, it is down from 45 per cent last year but I would not again read too much into that, it still remains the single largest asset class in which the UHNIs are investing but I would not be able to generalise on an individual in a tier-2, tier-3 city vis-à-vis an individual in a metro today. The differentiation which I see is actually individual to individual, so you could, as I said, not generalise that a guy in Mumbai is going to behave exactly in the same way as a guy in Delhi. Also one cannot expect that the Jamshedpurs and Nagpurs of the world will behave in the same way.

It depends on the individual what kind of risks they want to take, what kind of return expectations they have, what is the liquidity need for the money etc. So, it is actually a combination of a lot of things which determine where these people invest their monies in. But majority of the money, I would say, is made from equity as an asset class. So it is quite possible that they are confident of equities. Of course the fact that they are confident of their own business as well is also very, very prevalent.

ET Now: What is your key takeaway from this extensive piece of research speaking to 225 UHNIs across 12 cities?

Jaideep Hansraj: It is not a clear takeaway from the investment pattern. What I believe are big takeaways for us and for people who are interested in this would be the fact that tier-2, tier-3 cities are significantly getting larger and larger. The second is that equities as an asset class remains a favourite. The third thing is that a lot of people today are looking at succession planning through the creation of trust route and those are important findings which I would have given weightage to.