Kotak Wealth Management Top of The Pyramid India Edition 2016

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THE INDIAN ULTRA HNI
Optimism Uninterrupted
Foreword
Foreword
What an exciting year 2015 has been! India
we have profiled four unique individuals whose
emerged one of the strongest larger economies
ventures and investments have set out towards
in the world, despite bumps such as the stress
sustainable and positive changes.
in the banking sector and a choppy stock

market performance. For ultra HNIs, last years
Our annual survey delved into the details of
positivity flowed through into this year (Optimism
another interesting development from treating
Uninterrupted) with reforms taking root, inflation
death as taboo, Indias jet set has started facing
under control, and economic growth looking up.
the inevitable head-on and is actively providing

for and simplifying the lives of their loved ones,
Dipak Gupta
Joint Managing Director
Kotak Mahindra Bank Ltd.
Our annual report, Kotak Wealth Managements
employees, and dependents through succession
Top of the Pyramid (2016 edition), continues to
planning initiatives. Top of the Pyramid looks at
capture the mood of the ultra HNIs in India in the
the various means that the ultra HNIs employ to
context of the countrys changing socio-economic
plan for progression.
landscape. Top of the Pyramid remains the last

word on the lifestyles, aspirations, and opinions of
As always, Top of the Pyramid takes you through
Indias most wealthy. In addition to analysing the
the extraordinary and remarkable lives of Indias
spending and investment patterns of the
ultra HNIs that continue to stay firmly at the helm
ultra HNIs, for 2015, Top of the Pyramid also covers
of Indias development journey.
their increasing interest in art and collectibles, and

their growing affinity for wearable devices.
Happy reading!
The edition has looked at the growing tendency

among the ultra HNIs to incorporate increasing
goodness into their lives. Two such inclinations
have emerged strongly their keen interest in
renewable energy and their increasing bent
towards investing in companies that make a
sustainable difference to many peoples lives, also
known as impact investments. In this context,
01
TOP OF THE PYRAMID 2016 | Kotak Wealth Management
INSIDE THE REPORT

04
08
12
About the report

Executive summary
SPECIAL FOCUS
43 Succession Planning !
Modes of succession planning
! Activities and time allocation
Implementation
PROFILE
Ms Shaheen Mistri
Founder, Akanksha Foundation
& CEO, Teach For India
19 SPENDS
! Income allocation
Areas of spends
! Apparel and accessories
! Art and paintings
Wearable devices
PROFILE
Mr Nagaraja Prakasam
Partner, Acumen Fund
02
SPECIAL FOCUS
37 Collectibles
Type of collectibles
Sources of purchase
Key drivers
SPECIAL FOCUS
55 Renewable Energy
Importance of renewable energy!
!!Types of renewable energy and
investment patterns
SPECIAL FOCUS
73 Impact Investment
! !Ultra HNI exposure to impact investment
! !Sectors in impact investment
!!Key drivers
! !Key drivers
! !Investment modes
PROFILE
Mr Vinod Keni
Co-founder & Partner,
Peachtree Management Advisor
PROFILE
Ms Roopa Kudva
Partner & Managing Director,
Omidyar Network India Advisors
63 INVESTMENTS
Sources of wealth and !
! !asset allocation
!!Commodities!
03
About the
Report
op of the Pyramid is Kotak Wealth
behaviour in apparel and accessories, art
Managements annual publication that
and paintings, and wearable devices. The
covers the spending, investment and
special focus of this years edition is collectibles,
lifestyle patterns of ultra-high-networth
renewable energy, succession planning and
individuals (HNIs). Kotak Wealth Management,
impact investments.
the private banking arm of Kotak Mahindra Bank,

commissioned professional services firm Ernst &
Making of Top of the Pyramid 2016
Young LLP (EY) for the report.

During our research, we observed that
EY collaborated with market research firm
emerging cities and small towns continue to
Feedback Consulting for the survey to study and
form a significant part of the Indian ultra-HNH
analyse ultra-HNI trends. For its projections, EY
population. We found that besides the top-four
used parameters such as GDP growth, savings and
metro cities, non-metro cities such as Bengaluru,
inflation rates, past and projected financial and
Ahmedabad, Pune, Hyderabad, Nagpur,
non-financial asset-class allocations, and returns.
and Ludhiana contribute 45% to the Indian

ultra-HNI population.
With the advent of improved government
This year saw a

7% increase in
the number of
ultra HNHs to
about 146,600.
This continuing
positive sentiment
is captured in the
theme Optimism
Uninterrupted
04
policies and reforms, both accomplished and
The current report is a culmination of insights
planned, India has emerged as a much stronger
from three main sources that are listed below:
economy. These government initiatives have

influenced the investing and spending patterns of
1.A detailed market survey of 225 ultra HNIs
ultra high-networth households in India. This year
by Feedback Consulting. The survey took place
saw an increase in the number of ultra
between January 2016 and March 2016 in the
HNHs to about 146,600 (7% growth over last
form of face-to-face interviews. These interviews
year). It is this continuing positive sentiment
were conducted over 12 cities to understand the
that is captured in the theme of the report
lifestyle of ultra HNIs in India and changes over
Optimism Uninterrupted.
the previous year.
While looking at their spending and investing
2.A series of interviews were conducted with
patterns, the report has explored ultra-HNI
ultra HNIs to understand their patterns and
About the Report
preferences in impact investments, renewable
survey and validated its conclusions through
energy, collectibles, and art and paintings. In
primary interactions with service providers.
addition, their spending patterns in apparel and

accessories and preferences in wearable devices
This report would not have been possible without
were also studied.
the cooperation of all the survey respondents

and the interviewees. We thank them for their
3.Secondary research and additional analysis
invaluable support, the time they put at our
by EY. EY extensively analysed the results of the
disposal, and the insights they offered.
Covers of the last five editions
2011
2014
2012
2013
2015
05
About Kotak Mahindra Group
Kotak Groups solutions are technology driven,

contemporary, and comprehensive, and they
The Kotak Mahindra Group has come a long way
span consumer, commercial, corporate and
since its early days and caters to diverse financial
investment banking, wealth management, retail
needs of individuals and the corporate sector,
and institutional equities, asset management, life
nationally as well as internationally. With its
and general insurance. The bank is channelising its
understanding, experience, infrastructure, and
industry experience and capabilities to cater to its
most importantly, its commitment, the Group
changing customer aspirations.
consistently delivers pragmatic solutions.

Effective April 1, 2015, ING Vysya Bank Ltd.
Kotak has consistently pursued opportunities
merged with Kotak Mahindra Bank Ltd. creating a
and capitalised on them in a rapidly changing
`2 trillion institution (consolidated). As on March
economic and business landscape.
31, 2016, the merged entity Kotak Mahindra

Bank Ltd, has a significant national footprint of
In the early period of Kotaks journey, one
1,333 branches and 2,032 ATMs spread across 674
particular day stands out 21, November 1985.
locations, affording it the capacity and means to
On that day, Mr Uday Kotak identified an
serve its customers even better.
opportunity in the bill-discounting market. With

a seed capital of less than US$80,000, borrowed
About Kotak Wealth Management
from family and friends, and a small team of three

that has grown to over 40,000 as on March 31,
Kotak Wealth Management is Kotak Mahindra
2016, he skillfully steered what was initially a bill-
Banks private banking arm. It provides financial
discounting startup into a giant financial services
advice to some of the most distinguished high-
conglomerate with assets of US$19 billion.
networth families in the country. It is one of the

oldest and the most respected wealth managers
In February 2003, Kotak Mahindra Finance Ltd.,
in India with over 16 years of experience. Its
the groups flagship company, received a banking
client base ranges from entrepreneurs to business
license from the Reserve Bank of India (RBI),
families and employed professionals, including
becoming the first non-banking finance company
over 40% of Indias top-100 families (as per the
in public to convert into a bank Kotak Mahindra
Forbes India Rich List, 2015).
Bank Ltd.
06
About the Report
We believe that no single asset class tends
Kotak Wealth Management has been adjudged
to perform consistently over a long period and
the Best Private Bank - India for the 7th year in a
that an HNI needs to have access to various
row, by FinanceAsia Country Awards 2015.
asset classes, investment styles, themes, and

tenures. With this philosophy, Kotak has built a
formidable suite of products and services for this
specific audience.
Our offerings are customised for the clients
profile and investment objectives. With an
in-depth understanding of the clients
requirements and of various asset classes, Kotak
offers the widest range of financial solutions
through a transaction-based investment approach
or the asset-advisory approach. Our truly bespoke
banking solutions also include one of the most
premium credit card propositions offered, by
invitation, to eminent clients.
We also offer Family Office Services to
ultra-high-networth investors, providing
comprehensive financial solutions that go
beyond investments. Through Kotak Mahindra
Trusteeship Services we offer estate planning
services that deal with succession planning by
creating private family trusts.
We have maintained our leadership position due
to our in-depth understanding of our clients'
requirements and the macro environment, and
our prowess over various asset classes.
07
Executive
Summary
Optimism about growth boosted both spends and investments
n FY16, India emerged as one of the
they treasure the absolute pleasure of owning a
strongest economies the world over,
beautiful and timeless creation, but also because
because of robust GDP growth and
owning art has started making sound business
reduction in both inflation and current-
sense due to its manifold value appreciation.
account deficit. This translated into
In this light, ultra HNIs are increasingly treating art
improved ultra-HNI sentiment, which is reflected
and paintings as an integral component of their
in their increased spends and investments.
portfolios. Even so, our survey shows that

for 68% of ultra HNIs, art and paintings are
We estimate that the number of ultra HNHs grew
impulse purchases; only 32% engage in research
to 146,600 in FY16 from around 137,100 last year,
before buying.
a moderate growth rate of 7% over one year and

16% compounded growth over five years.
If e-commerce was the buzz last year, this year

wearable devices are gaining ground from a
Optimism about economic growth has motivated
technology perspective and have become very
ultra HNIs to increase their investments into
popular. Ultra HNIs have followed and adopted
their primary businesses as well as to boost
this trend keenly, so much so, that these devices
their spends. Most of their spending categories
now form a part of their daily lifestyle. Popular
have seen an increase. Jewellery, apparel, and
devices include smart watches, fitness bands,
electronics continue to be at the top, accounting
smart glasses, virtual reality headsets, and sleep
for nearly 50% of total spends. In our interactions,
headphones to name only a few. These wearable
we found that 64% ultra HNIs are impulsive
devices are carving out a niche for themselves
buyers when it comes to apparel and accessories.
in catering to specific needs such as fitness
Despite the allure of foreign destinations, many
bands for health-conscious individuals and smart
of them prefer to shop within India, as most major
watches to aid convenience.
foreign luxury brands are now available locally.

Another area of passion for the ultra HNIs
08
There has also been increasing awareness about
continues to be collectibles. They do not leave
art among the ultra HNIs, not only because
any stone unturned to collect items that add to
Executive Summary
the grandeur of their living rooms, office spaces,
towards solar rooftops and boilers and wind-
or atriums. Passion is a major factor in pursuing
driven machinery, mainly because of government
collectibles 70% of ultra HNIs that we interacted
incentives. This is likely to be a big focus area for
with confessed that their passion for owning a
ultra HNIs.
collection of exotic and interesting items drove

their purchases.
As their wealth continues to grow, it becomes

very important for ultra HNIs to pass it on to
Renewable energy has been an important
upcoming generations in a systematic manner,
component of Indias energy planning process
which ensures sustainable growth. Today, most
for more than four decades and ultra HNIs have
ultra HNIs understand that succession planning is
always been enthusiastic about adopting and
a continuous and proactive process, and their plan
promoting renewable energy.
involves identifying potential leaders, grooming

them, and encouraging them to look beyond their
Most of them strongly believe in an eco-friendly
immediate responsibilities.
lifestyle and strive to re-use resources, to plant

trees, and to use electric / alternate fuel cars.
Our survey revealed that 43% of ultra HNIs
Socially conscious and environment-friendly
prepare for at least five years to put an efficient
ultra HNIs are increasingly adopting green
succession plan in place, while another 35%
building practices to minimise the footprint of
take anywhere between two to five years.
their homes on the ecology while maximising
When it comes to a successor, over 90% of
comfort. This sector is also seeing investments
ultra HNIs choose from their children and high-
Optimism about economic growth has

motivated ultra HNIs to increase their investments
into their primary businesses as well as to
boost their spends
09
Increased spends are a good proxy for

rising optimism and are likely to continue
with steady economic growth
performing family members, while less than 10%
As part of alternate assets, commodities attracted
choose outsiders.
ultra-HNI interest this year. Our survey revealed

that 72% of ultra HNIs invest in commodities; of
However, this trend is likely to change in
these, 40% have invested about 5-10% of their
the future because of the increasing need
total assets in commodities, with gold and silver
for professional management from a good
continuing to be the most preferred. This trend
governance perspective. Even today, most ultra
is likely to continue until equity markets start
HNIs (73%) prefer planning for succession with
picking up.
their close confidants; a few look for advice from

external sources such as chartered accountants,
The philanthropic interest of ultra HNIs has
consultants, and wealth managers. People are also
seen a change over the years; the need to
gradually relying on professional estate planners,
build enterprises that not only create a positive
trustees, and wealth advisors.
difference in society, but ones that are selfsufficient, economically viable, and lasting,
The bullish trend in equity markets saw a reversal
essentially sustainable social enterprises, is
this year with a near-20% fall, mainly due to
very strong. This has led to the emergence of
global events such as a sharp plunge in the
impact investing a growing trend among the
Chinese stock markets and a drop in foreign fund
elite. While the general interest for impact
flows. This led to a realignment of the investment
investments is high, professionals seem to have
mix with real estate (mainly commercial), debt,
the highest inclination 67% have an exposure to
and alternate assets gaining ground at the cost
these investments. Key sectors attracting impact
of equities.
10
Executive Summary
investment include financial services, clean energy,
on better government and private consumption
and affordable housing.
and spending outlook. Increased spends are a

good proxy for rising optimism and are likely to
The impact-investment space is receiving
continue with steady economic growth.
traction from the ultra HNIs, mainly based on
Higher propensity towards spending also brings
the attractiveness of the sector and stability of
good tidings for the luxury goods market, which
returns. In addition to the existing Indian funds
seems to be getting stronger in India and is
focusing on the segment, there is also a trend
spreading out its reach to capture smaller towns
towards impact-investment-focused global funds
and cities.
setting up shop in India, which will give further

impetus to this sector.
The economic scenario has remained steady
and the mood of ultra HNIs is buoyant based
As their wealth continues to grow, it becomes

very important for ultra HNIs to pass it on
to upcoming generations in a systematic
manner, which ensures sustainable growth
11
Optimism
Uninterrupted!
The ultra HNI mood has been
upbeat because of strong economic growth
Y16 was one more step towards a
Falling oil prices also had a positive impact on the
stronger India. Stability in GDP growth seen
current account deficit, which was at 1.1% of GDP
this year (7.6% in FY16, 7.2% in FY15),
for FY16.
even as other BRICS nations and major

economies struggled, was a strong indicator of
The governments flagship policies Start-up
sustained progress. Indias GDP growth surpassing
India Action Plan, Make in India and Smart Cities
Chinas was another milestone, one that India
are gaining traction both in India and abroad.
should be able to sustain. The quantum and
These initiatives intend to strengthen Indias
magnitude of the governments reforms, both
infrastructure; they have already translated into
accomplished and planned, are also indicators of

a stronger economy.
Other factors that contributed to Indias progress
were a fall in crude oil prices and inflation coming
in below the target range, which allowed the
RBI to reduce its repo rate twice in FY16. This
move is likely to reduce cost of borrowing and
stimulate growth by encouraging investment in
the corporate sector.
12
The governments flagship

policies Start-Up India
Action Plan, Make in
India, Smart Cities, and
Swachh Bharat are
gaining traction both in
India and abroad
Introduction
on-ground investment and led to the
Growth of Ultra HNHs in India
country becoming an attractive FDI destination.

While India still has a while to go before being
We believe there were 146,600 HNHs in FY16 with an

accumulated net worth of `135 trillion
counted among the best economies, strong signs

are emerging.
With rising pollution levels, especially in metro
cities, there is an increasing awareness about
the environment. The government has launched
several initiatives to tackle this issue, which has
also prompted interest from the private sector.
Ultra HNIs have evinced interest in investing
into sectors focused on tackling social and
environmental issues.
`86
`45 `65 trillion
trillion
2010-11
62,000
trillion
2011-12
81,000
`128
`104
trillion
trillion
2012-13
100,900
`135
trillion
2013-14
117,000
2014-15
137,100
2015-16
146,600
On the global front, the Chinese market crash

was a result of perceived weakness in the Chinese
economy, which in turn was interpreted as a sign
of an impending global downturn. The Indian
stock markets also suffered from the effects, with
a sharp correction and general cautiousness in
sentiment through the year.
The US Presidential election due this year, and
the Brexit, are something that India is following
closely; both events have a considerable bearing
on global economies, especially Indias.
Combined Net Worth
Number of Ultra HNHs
Source: Top of the Pyramid 2016, Kotak Wealth Management
13
Indias Ultra High Networth Households

Our current edition of Top of the Pyramid
higher at 17% and 22%). These HNHs represent
follows the previous editions methodology. We
an accumulated net worth of `135 trillion, which
define an ultra HNI household (HNH) as one with a
is a 5% growth on last years wealth and 18%
minimum net worth of `250 million, mapped over
compounded growth over the last five years.
10 years. Growth in the number of ultra HNHs was

a bit slower this year.
We project that the number of ultra HNHs will

increase to 294,000 by FY21 with a combined net
We estimate that there were about 146,600
worth of `319 trillion driven by new ultra HNHs
ultra HNHs in FY16 vs. around 137,100 last year,
from emerging sectors and new avenues for
a moderate growth rate of 7% over one year
investments that give higher returns. Smaller cities
and a 16% compounded growth over five years
will also contribute to this growth in the number
(corresponding growth rates last year were
of ultra HNIs and their wealth.
Growth in the Number of Ultra HNH Households

We expect these to touch 294,000 by FY21 with a combined net worth of `319 trillion
Compounded
growth of the
number of
Indian HNHs
over the last five
years was 16%
with 146,600
such households
in FY16
14
`135
146,600
trillion
2015-16
319
trillion
294,000
2020-21
Combined Net Worth
Number of Ultra HNHs
Introduction
The Geographical Spread of Ultra HNHs in India

While metros continued to hold 55%, emerging cities and small towns
stayed at a significant 45%
Small centres such

as Surat, Indore
and Jamshedpur
continue to create
new ultra HNIs,
mainly in the
inheritor and
entrepreneur
categories
23% 5
17%
55%
Top 4 cities: Mumbai, Delhi, Chennai, Kolkata
Next 6 cities: Bengaluru, Ahmedabad, Pune, Hyderabad, Nagpur, Ludhiana
Rest of India
Next 11-20 cities: Chandigarh, Surat, Jaipur, Lucknow, Kanpur, Jamshedpur, Amritsar, Raipur, Indore, Aurangabad
The business and investor-friendly approach of
As predicted in previous editions of Top of
the government will help nurture and sustain a
the Pyramid, we believe emerging cities and
start-up ecosystem in the country, and propel the
small towns will continue to form a significant
growth of ultra HNHs.
proportion of the ultra-HNH population-
15
Indianisation of their
brands has been
tried earlier by
international luxury
companies to increase
their appeal
exclusivity this helps address key imperatives

for luxury brands operating in India, which are to
increase the awareness of the brand and establish
brand credentials.
While Indian luxury private labels are known to
have product lines that are largely Indian, there
are a few instances where international luxury
brands have Indianised their product lines,
we estimate 45% coming from these non-
commonly seen in the food industry.
metro centres. The penetration of the digital

phenomenon is influencing and changing the way
This is not a new phenomenon even earlier,
people in India buy not just common goods, but
international luxury brands have tried this
also luxury items. Until a few years ago, luxury
approach to increase the appeal of their products
retailers thought that selling these exclusive goods
in smaller cities, but it has not gained the traction
needs a personal touch at their outlets, but they
and the attention it deserves. It would be
are slowly warming up to the idea of an online
interesting to see if international luxury brands
marketplace.
are able to successfully employ Indianisation as a

way to increase their reach and capture traditional
In fact, the difficulty in establishing a connection
Indian ultra HNIs.
with the non-metro customer base is the primary

reason that luxury brands are turning towards
The subsequent chapters of Top of the
the fast-permeating digital phenomenon. A few
Pyramid will take you through the current
retailers are also adopting models such as on-
lifestyle trends and investment patterns of Indian
demand home shopping for customers from non-
ultra HNIs.
metros and small towns.

The report this year covers unique themes such
16
The quest to reach a wider population is also
as collectibles, renewable energy, succession
aided by start-ups with innovative models,
planning and impact investment capturing the
which are introducing experiencing luxury and
dynamic lifestyles of ultra HNIs.
Introduction
The Key Attributes of

Ultra HNIs in the Indian Context
The following table gives the key attributes across three categories of ultra HNIs
entrepreneurs, inheritors, and professionals in the Indian context
Entrepreneur
Inheritor
Professional
Entrepreneurship
Inheritance,
entrepreneurship
Self-recognition
and achievement
Wealth preservation
and growth
Self
actualisation
Wealth is strictly for

the immediate family
Wealth must remain

within the family
Wealth is for family,

but they must strive
to earn it
Attainment of
luxurious lifestyle
Maintaining a
luxurious lifestyle
Attaining value
for money
Provides mainly
monetary support,
less time
Compassionate,
provides money
Important part of the

spending, provides
time and money
More opportunistic,
informal
Organised
and planned
Disciplined and
planned with
systematic goals
Sources of wealth
Motives for wealth creation
Attitude to perpetuation of wealth
Drivers for spending
Attitude to charity
Approach to investing
17
18
Spends
SPEND
HOW THE ULTRA HNIs
FOCUS
ON
LUXURY
UNABATED!
The celebration continues
The average age of an Indian ultra HNI is reducing, and nearly half of them
are now less than 40 years old. Increasing number of start-ups have aided this
fall in average age. Good performance of the Indian economy, as evident from
high GDP growth, is reflected in rising ultra HNI spends this year.
Increasingly younger ultra HNIs, with high disposable incomes and an ample
choice of luxury options, are usually high spenders. They are also the ones
who are largely responsible for bringing in concepts such as experiential
luxury into the limelight.
The recent ecommerce and technology boom has created many relatively
young ultra HNIs who have sky-high aspirations and desires when it comes
to luxury in their lifestyle. Luxury retailers have recognised this opportunity,
and are already aiming to capture the mind space of these young guns by
engaging in targeted marketing. This is one of the reasons for the rapid
expansion of these retailers into smaller centres to leverage, on the increasing
ad-hoc spends of these ultra HNIs.
19
Ultra HNIs Choose Investments over Savings

In FY16, India recorded the highest GDP growth
investments into primary businesses. This year,
among major world economies, thereby
59% of the ultra HNIs we surveyed increased their
incentivising various stakeholders to increase their
investments into primary businesses and 43% saw
investments into the economy. Inflation saw a
a decrease in their overall savings, which they
downward trend with June 2015 recording the
substituted with investments.
lowest monthly CPI of 3.69% since FY14s high of

over 11%. Consequently, the RBI cut rates twice
Non-discretionary expenses continued to
in FY16 (cumulatively by 0.75%), even after it had
dominate their income allocation, except in the
already effected two rate cuts of 0.25% each, just
case of entrepreneurs, for whom investments into
before the start of the financial year.
businesses became a priority. For professionals,

the proportion of savings reduced over last year,
The rate cuts led to a fall in lending rates and
with a commensurate increase in their investments
ultra HNIs turned to substituting savings for
for personal wealth.
How Ultra HNIs Allocated their Income this Year

Prioritised investments into primary businesses and personal wealth over savings
15 %
23%
Discretionary
expenses
Investment into
primary business
25%
Expenses
Savings and
Investments
14%
Savings
45 %
Non-discretionary
expenses
55%
16%
Investment for
personal wealth
2%
Others
20
5%
Charity
Spends
Family-Centred Expenses see a Spike

Jewellery and apparel continue to remain ultra
HNIs top-spending categories, followed by
holidays. Family-centred expenses spending
on jewellery, holidays, apparel, automobiles,
Allocation of Income by Ultra HNIs

Professionals reduced savings this year, to choose
investments for personal wealth
home dcor and events continue to dominate

by contributing to 68% of overall spends, a slight
increase over 67% last year.
A higher proportion of ultra HNIs compared
Entrepreneur
Inheritor
Professional
to last year are now considering these

family-related expenses (except home dcor) as
non-discretionary.
25%
23%
17%
Investment into
primary business
In the jewellery space, Indian boutique

jewellers are becoming popular. Recently, a
prominent Indian jewellery designers collection
of customised diamond cuts was worn by a
27%
24%
23%
Non-discretionary
expenses
Hollywood celebrity at the Oscars, making it so

popular with the ultra HNI that his company is
coming out with a `1000 crore IPO.
15% 15% 16%
Apparel and accessories are the second biggest

spending avenue for ultra HNIs, and one of the
primary ways that they showcase their wealth and
A renowned Hollywood actress

wore the collection of a
prominent Indian jeweller at
the Oscars this boosted the
popularity of the jeweller among
the ultra HNI. The jeweller is
now planning a `1,000 crore IPO!
5%
5%
14% 13%
19%
15% 15%
2%
2%
4%
19%
2%
Discretionary
expenses
Charity
Savings
Investment for
personal wealth
Others
21
Jewellery and Apparel Retain the Largest Share within Areas of Spending
Share of apparel and accessories, holidays, and electronic gadgets increased
Jewellery
17%
Apparel
16%
Holidays
15%
Electronics
13%
Home
Related
Events
11%
9%
Luxury
Watches
5%
Vintage
Spirits
5%
Art &
Paintings
5%
Automobile
4%
passions. In an attempt to capture the interests
Almost all areas of spends have seen an
of Indias ultra HNIs, subsequent chapters detail
increase over last year, indicating positive
their spending preferences on apparel and
sentiment among ultra HNIs, driven by improved
accessories, in addition to their interest in
economic outlook.
wearable devices, art, automobiles, and events.
22
We have also captured their growing interest in a
Luxury companies looking to woo young ultra
sustainable lifestyle and renewable energy as an
HNIs and garner a large share of their lifestyle
investment avenue.
spends are likely to take a cue from this pattern.
Spends
UPSCALE ELEGANCE
Designer-wear and expensive accessories are haute with the Indian ultra HNI
he ultra HNIs live in a world filled with
the brim with the latest outfits from premier
innumerable business appointments,
luxury brands. In their purchases of apparel and
luncheons, formal dinners, and high-brow
accessories, brand value is what pulls at the ultra-
events, adorned and embellished by a
HNI heart and purse-strings the most. They cannot
landscape of beautiful clothes elegant business
resist the tasteful temptation of the limited-
suits, sophisticated foreign labels, and exclusive
edition release of luxury-brand items, and it
collections by stylish designers, both from India
usually turns into an impulse purchase.
and abroad.
In our interactions with ultra HNIs, we found that
This section attempts to peek into the glamorous
64% of them are impulsive buyers when it comes
wardrobes of Indias richest, usually filled to
to apparel and accessories.
When a member
of the British
royal family
wore an outfit
by a high-end
Indian designer,
the designers
website crashed
due to enquiries
from all across
the globe
23
While branded luxury was the most important
Dubai and Singapore have emerged as other
driver in their apparel choices (32% of them said
popular destinations for apparel and accessory
that this was their first priority), weather-specific
shopping, while Europe is the next most popular.
choices in clothing was important for 26% of ultra
What they really value is variety and exclusivity.
HNIs. Interestingly, men were found to be more

Many Indian ultra HNIs and their family members,
brand conscious compared to women!
particularly women, are true fashionistas at

Not too long ago, visiting a foreign location for
heart. They own exquisite collections of Indian
shopping and other purchases was de riguer for
and western wear, which are integral to the
these brand-conscious ultra HNIs because of the
various high-profile events that they attend
limited choice that shopping in India had to offer.
almost daily. Most ultra HNI wardrobes, especially
However, this is not strictly necessary anymore -
womens, are sure to include luxuriously
we observed through our survey that as many
embellished Indian-wear crafted by prominent
as 59% ultra HNIs now satisfy their apparel and
Indian designers and accessories from top-end
accessory purchase needs in India itself.
international brands.
Popular Buying Destinations for Apparel and Accessories

India is the favourite, followed by Dubai, Singapore and Europe
India
59
Dubai
28
Singapore
Europe
Thailand
28
19%
5%
3%
Other destinations
24
Spends
The Frequency of Apparel and Accessory Purchases

Once a quarter to once a month
15%
16%
15%
33%
33%
30%
43%
41%
7%
5%
9%
1%
Entrepreneur
More than once a month
31%
9%
41%
29%
19%
10%
Inheritor
Once a month
9%
4%
Professional
Once a quarter
Twice a year
Overall
At least once a year
In our interactions, we observed that while
other aesthetics such as colours and amount of
professionals tend to have a lower frequency of
decoration used to Indian tastes. A Lebanese
apparel and accessory purchases, entrepreneurs
designer's spring 2016 collection was inspired by
and inheritors are more frequent buyers.
Indian looks of the traditional saree and salwar
However, most ultra HNIs picked up these items
kameez. A French luxury footwear and fashion
between once a month and once a quarter.
designer launched a Bollywood-inspired shoe

collection which included traditional Indian
Interestingly, product catalogues of international
designs and embroidery.
luxury brands have started showing an inclination

towards Indianise, personalise, and customise.
Past offerings by top brands have set the tone
For example, a European pen manufacturer
for the future in terms of trends in apparel and
regionalised all its marketing material letterheads,
accessories, one that is increasingly inclusive of
invitation letters, and newsletters; it also altered
Indian-ultra HNI tastes and desires.
25
ART AND PAINTINGS

For the simple pleasure of owning beauty
eorge Bernard Shaw is once believed
to have said, Without art, the
crudeness of reality would make the
world unbearable. Indian ultra
HNIs seem to be on the same page as
Mr Shaw most have always been passionate
about art, but a growing number are now
considering it a safe haven for investment and a
means to preserve family wealth.
Art and paintings have always been an inherent
part of Indian culture, whether it is Mithila
Madhubani paintings, Rajasthani miniatures,
Mughal, Mysore, Pahari, Tanjore, and Rajput
paintings, Raja Ravi Varmas inimitable style, or
Odishas pattachitras they all are an important
part of Indias rich history.
With increasing awareness about art, not only
for the simple pleasure of owning a beautiful
and timeless creation, but also for the sound
Leading auction houses

focus on prolific Indian
artists besides other
modern figurative and
abstract artists
26
Spends
What Drives Ultra HNI Purchases of Art?

Passion and status are key drivers
85%
Passion
81%
Status
31%
Tradition
28%
Networking
26%
Resale value
business sense it makes due to its manifold value-
deepen the market, thereby making this segment
appreciation, ultra HNIs are increasingly treating
an alternative investment avenue.
art and paintings as an integral component of

their portfolio.
Of the ultra HNIs we surveyed, 26% said that

they buy art and paintings for their resale value
Our survey shows that for 68% of ultra HNIs, art
and as an alternate asset-allocation avenue,
and paintings are impulse purchases; only 32%
given that this segment acts as an effective
engage in research before making a purchase
hedge against inflation and weak economic
decision. For more than 80%, passion and status
periods. In addition to individual ultra HNIs,
are key drivers for acquiring art and paintings.
buying of artwork has seen heightened interest
Other reasons include tradition and networking.
from the corporate sector and from institutions -
Ultra HNIs are combining their aesthetic sense
in fact, the corporate segment has already
with their financial intuition to broaden and
amassed significant collections.
27
Types of Paintings that Indian Ultra HNIs Like

64% prefer Indian paintings and 56% prefer western ones
64 56 35 24 33
%
Indian
Western
Dependent on
Historical Importance
Contemporary
Far Eastern
28
Indian art and artists have started receiving
has led to Indian art becoming the first choice
global recognition; in fact, in the last few years,
for ultra HNIs. Indian contemporary works also
Indian art has become a common feature in global
sell at record-breaking prices in prestigious
auctions. Increasing awareness and appreciation
auction houses.
Spends
Sources of Purchases
It is extremely important for ultra HNIs to obtain
Based on our survey, we have found that 71%
independent and objective advice while making
ultra HNIs prefer to buy art and paintings from
investments in any asset class, including high-
art houses, 58% choose exhibitions, and 50% rely
value works such as art and paintings. The art
on Indian auctions. Online galleries, international
market has grown considerably in recent years,
auctions, and resale in secondary markets are also
which presents interesting opportunities for
preferred ways of buying art and paintings.
providers of art-related services, as well as for

wealth-management services that would integrate
art in their services and strategies.
Last year, while

inaugurating
an art museum
in Mumbai,
a prominent
ultra-HNI family
displayed
30 paintings
belonging to
Baroda's royal
family
Where do Ultra HNIs Shop for Art?

Most prefer buying from art houses, exhibitions, and auctions
50%
71%
20%
Indian Auction
Art House
58%
Exhibitions
International Auction
38%
Online Galleries
16%
Resale in Secondary Market
29
Spending Patterns on Art

Driven by high disposable wealth, the growing
them twice a year. Only 10% spend on art at
ultra HNI population has triggered a change in
least once in a quarter. While the interest levels
investment behaviour in art and paintings. Prices
in art are high, the actual spending on art, in
are driven by a combination of availability, quality,
comparison, is modest among the wider ultra HNI
and popularity.
segment; 85% spend less than `10 lakh on art and

paintings in a year while only 3% invested more
Of the ones we talked to, 61% ultra HNIs purchase
than `25 lakh per annum.
art and paintings only once a year and 29% buy

Our survey shows that average spends were
How Much do they Spend on Art?

Not much; 97% ultra HNIs spend less than `25 lakh per year
12%
`10-25 Lakh
`25-50 Lakh
Less than `10 Lakh
3%
85%

30
`7.5 lakh per year. This spending trend is likely

to rise with the growing demand and popularity
of Indian art across the globe and as ultra HNIs
develop a deeper understanding and appreciation
for art.
One of the world's

largest auction houses
recently made a record for
any auction held in India by selling art worth `100
crore in December 2015,
highlighting the appetite
for Indian art
Spends
ACCESSIBLE CONVENIENCE
Wearable devices becoming very popular
ver the years, the term wearable has
Interestingly, our survey showed that older
undergone a dramatic change. New
ultra Indian HNIs, between the ages of
technology and its enthusiastic adoption
36 and 50 years, were more eager to adopt
have helped to create a whole suite of
wearable devices than the younger ones;
electronic products that can be worn. Ultra HNIs
we saw close to 61% adoption among the
have followed and adopted this trend keenly, so
36 to 50-year age group compared to 55%
much so that these devices now form part of their
adoption among ultra HNIs who are below 35
daily lifestyle.
years of age.
Increasing Prevalence of Wearable Devices among Ultra HNIs

57% of them use these devices in their daily lives
57%
Of ultra HNIs use

wearable devices
31
Smart watches
are the new
rage among the
ultra HNIs and
fitness bands are
also becoming
increasingly
popular
The quest for access to real-time information in an
like sleep headphones which block out noise
easy and convenient manner has led to as many
to aid slumber, while being comfortable for the
as 57% of ultra HNIs becoming users of atleast
sleeping user are also gaining popularity.
one high-end wearable device. What was once

considered fiction has now become a reality;
These wearable devices are carving out a niche for
devices of the future are now exclusive and
themselves in catering to specific needs such as
more accessible.
fitness bands for health-conscious individuals and

smart watches to aid convenience. These gadgets
Currently, popular wearable devices include smart
assist users in something as simple as allowing
watches, fitness bands, smart glasses, virtual
them to answer calls, to something as complex
reality headsets, and sleep headphones to name
as becoming their personal health assistants for
a few. Our survey uncovered that as many as 68%
tracking sleep patterns and fitness regimes. We
of ultra HNIs have a smart watch it seems to be
have seen the children of ultra HNIs showing an
one of their most popular wearable devices.
avid interest in wearable devices such as smart

watches, virtual reality headsets, and segues.
While only 32% of them use fitness bands, we

expect this usage to grow as awareness about
The adoption of wearable devices has led to an
their advantages increases. Other niche products
increase in interest in this sector, which is giving

rise to new start-ups; this, in turn, could make way
for ultra HNIs that are both young and tech savvy.
Most Popular Wearable Devices

Smart watches are the rage; fitness bands are fast catching up
68%
For 81% of ultra HNIs, wearable devices serve

as additions to social status. For an equally high
proportion (73%), passion for these devices drives
their purchases.
32%
31%
These hands-free devices are beginning to act as

virtual assistants to ultra HNIs and provide them
17%
with customised recommendations such as a

fitness band that prompts an optimal workout
regime allowing the users to set targets as per
Smart Watch
Fitness Bands
VR Headset
32
Sleep
Headphones
their capability and stamina. At least 70% of ultra

HNIs in our survey believe that the high degree of
customisation offered by wearables has led to a
marginal-to-positive change in their lifestyles.
Spends
Reasons for Using Wearables

Most common reasons include social status and passion
81% 73%
Social Status
Passion
45%
Health & Fitness
Hands-free
wearable devices
are already
acting like virtual
assistants to
ultra HNIs; their
customised
recommendations
should lead to
higher adoption
36%
Personal Safety
33 %
Convenience
31%
Innovation
Luxury wearable devices also provide options for
edge technology. These devices enable contactless
personalisation such as name and date engravings.
payments, gesture recognition, and remote access
Not surprisingly, a few luxury jewellery and watch
to cars and homes.
brands have taken the concept of a wearable

device to a different level with the introduction
The jet-set will increase their wearable-device
of smart jewellery for the ultra-rich diamond
usage, as these gradually cater to every aspect of
studs and 18-carat gold, combined with cutting-
their lifestyle.
33
PROFILE
Nagaraja
PRAKASAM
If the impact
is more with
low profit, it is
better to be
an NGO
M
34
r Nagaraja (Naga) is an angel investor,
decided to take a break from a flourishing career
impact-investment specialist, and a
and do something completely different. The seeds
member of the Indian Angel Network.
of this something different were sown almost
He spent 16 years (1996-2012) with CDC Software,
13 years ago; in 1999, he and his team had raised
most of it in the US, from where he left as
money for a group called Association for Indias
President, South and Southeast Asia. In 2012, CDC
Development, which was used to support NGOs
was sold to a private equity firm, and Mr Naga
in India.
Spends
He served as the groups president for a while
more time and effort, it has good potential. This
and spent time in India, particularly in Indias
led to the launch of IAN Impact, which is focussed
villages when he realised that he fervently wanted
solely on impact investments. Its first venture was
to contribute to the countrys social upliftment.
GoCoop, India's first social marketplace to buy
However, it was not until 2012 that he could
and source handmade apparel, home furnishings,
whole-heartedly pursue his hearts desire.
fabrics, and crafts directly from co-op weavers

and artisans.
From 2012, he has been a partner at Acumen

Fund, which invests patient capital in businesses
Initially, only 40-50 IAN members supported the
whose products and services enable the poor to
GoCoop concept, but ultimately all 350 came
transform their lives. This US-based company was
on board, which eventually fuelled investments
started by entrepreneur and investor Jacqueline
in Uniphore (company that allows software
Novogratz in 2001. Acumen has invested more
to understand and respond to natural human
than US$88 million in 82 companies across Africa,
speech in many languages), Saahas (organic
Latin America, and South Asia. Mr Naga joined
waste management, collection and recycling of
Acumen with the idea of bringing in the efficiency
packaging waste and e-waste), and Freshworld
of a corporate into the heart of an NGO.
(a farm to home FnV using electric smartcards).
Besides Acumen, he is a part of the Indian
In fact, Saahas, he recalls, was an NGO. It took
Angels Network, and the founder Chairman
a push from Naga and his portfolio consultant
of Native Angels Network, a board trustee
company for Saahas to realise that it did not have
of Nativelead Foundation, a non-profit
to remain an NGO it could become a sustainable
organisation promoting innovation-based New
social enterprise rather than depend on donations
Age entrepreneurship. He is also on the board of
for growth and perhaps make a bigger
several social-enterprise companies.
difference to peoples lives.
In his career as an angel investor, he has invested
All his investments are in the impact space right
in 18 startups in the impact investing space. His
now in the `50 lakh to `6 crore bracket with the
investment philosophy rests on what he calls the
average investment sweet spot at `3 crore. He
3Ps profit / planet / people. As an investor, my
calls this space high risk and high return.
The challenge
is to get wealth
into the social
ecosystem
main interest is profit. But as this is an impact

investment, there is a longer grace period so this
Naga has invested in 18 companies and is sitting
is called patient capital, he says.
on a 4X appreciation right now while some are

at 5X-13X return. 15 are doing well and 3 are not
Mr Naga was instrumental in making the Indian
doing well. He reinvests his returns, he says. He
Angel Network look at companies other than IT
believes that there is political will involved in
for investments. As part of IAN, he urged fellow
renewable energy in India and sees a bright future
investors to look at companies in the social space-
for this sector.
he believed that even though this space requires
35
36
Spends
SPECIAL FOCUS
COLLECTIBLES
Defining the quest for luxury and power
n the past, maharajas, royal families, and landlords lived
opulent lives and loved to surround themselves with
beautiful objects commonly called collectibles. These
collectibles were often their pride and joy and were
proudly displayed for their aesthetic and monetary value. These
collections have included vintage cars, gems and jewellery,
paintings and sculptures, and curios.
Snap to the present and the zest for collectibles is equally
visible in ultra-HNIs collections. Ultra HNIs have varied
tastes from the quaintest of objects to the most stunning,
ostentatious jewels.
These collectibles not only define their quest for luxury and
power, but also their desire to be exclusive and distinct. This
section explores the drivers for collectibles, various categories
within this segment, and their purchasing trends.
37
Most Preferred Collectibles that Ultra HNIs Invest In

A Kolhapurbased ultra HNI's
enviable car fleet
is maintained
by a team of
mechanics daily
Our survey revealed that 65% ultra HNIs prefer
depending on individual eclectic leanings. All
collecting electronic gadgets and about a third
latest luxury / sports car models launched in
have developed this interest over the last one
India from coupes to caravans are generally
year. Luxury cars account for 63% of ultra HNIs
pre-booked, showing the passion that ultra HNIs
collections, followed by investments made in art
have for cars as collectibles.
and paintings.
Ultra HNIs that invest in art / paintings for their
In fact, collecting cars that are antique or
collectibles tend to invest in the most expensive
fashionably modern is an established purchase
paintings by world-renowned artists, making their
trend among this community over many years.
homes veritable museums almost an intimate
These car collections are extremely opulent,
haven for art aficionados.
What Kind of Collectibles do Ultra HNIs Covet?

Most-owned are art and paintings, cars, and electronic gadgets
65%
63%
56%
40%
Electronic
Gadgets
Luxury / Sports
Cars
Art / Paintings
Sports / Cruise
Bikes
38
35%
Antiques
30%
Currency
27%
Other
Memorabilia
21%
Stamps
Spends
It is not just their homes that they adorn with

these artifacts they are very visible in their work
places too. Modern sculptures and contemporary
art is the latest flavour for the wealthy. Structures
and sculptures made out of waste and recycled
material are also becoming highly prized among
ultra HNIs.
The charm of letter writing is fading, but philately
An ultra HNI we met is

big into scripophily
he collects antique stocks
and bonds. His collection
totals more than
1,000 cancelled share and
bond certificates
(stamp collecting, once perceived as a hobby that

kids indulge in) has now become an investment
mechanism for ultra HNIs. Many of them look at
unheard of in India. Nevertheless, an ultra
stamps known for their antique value and history
HNI from Delhi has several rare, characteristic
as an alternate investment avenue.
specimens of many varieties, some of them going

back 200 years! He collects these carpets from
Collectibles are not always conventional. For
around the world and exhibits them in metro
example, having a passion for carpets is fairly
cities such as Delhi, Mumbai, and Bengaluru.
Sources of Purchases
Ultra HNIs do not leave any stone unturned
Of course, technology is augmenting traditional
in their quest for collectibles that add to the
physical purchases of collectibles; online
grandeur of their living rooms, office spaces,
channels as a source of collectibles are evolving.
or atriums. These purchases are traditionally
Our interactions revealed that 47% of ultra HNIs
known to require the collector visiting, examining,
are considering online channels for their purchase
and then estimating the value of the article
of collectibles.
being purchased.
While special shops and old markets of cities are
Even now, most collectibles are purchased through
famous among ultra HNIs for their collectibles
physical channels (not online ones) with 63%
shopping, the increasing interest and growing
through special stores or institutions.
awareness of niche collections is also providing
39
From Where do Ultra HNIs Purchase their Collectibles?

While mall displays and special stores are high up in ranking, online is making rapid inroads
65%
47%
34%
14%
Mall Display
Online Purchase
63%
Special Stores / Institutions
Collected by Self
Auction
21%
Museum
8%
Passed on as Heirloom
One of the
worlds oldest
auction houses
recently opened
an office in India
with a preview
of some of its
works for the
very wealthy
40
opportunities for specialised outlets, mobile apps,
opened an office in India recently and even
websites, and communities that are emerging and
announced an exclusive preview of some
shaping up the collectible marketplace in India.
of its works that would subsequently go under

the hammer.
Special institutions and communities provide

ultra HNIs the chance to pursue, purchase, and
These auction houses do not just engage in vanilla
showcase their collectibles.
auctioning of collectibles, but work towards

kindling the interest of the ultra-rich community
For example, because of the interest displayed
through educational events that keep them well-
by the Indian ultra HNI community, one of the
informed on current trends and concerns in the
worlds most prominent and oldest auction houses
global collectibles market.
Spends
Key Drivers for Collectibles: Led by Passion

Passion is a major factor in pursuing
collectibles 70% of the ultra HNIs that we
interacted with confessed that their passion for
What Drives Ultra HNIs Purchases of Collectibles?

Most are driven by passion and consider these status symbols
owning a collection of exotic and interesting

items drove their purchases. This passion has
made them take steps towards setting up
communities to promote art and to collect exotic
items. For example, a prominent Mumbai-based
Passion
70%
Status
63%
Tradition
family has set up a foundation to promote art

and has opened up their entire collection to the
28%
public. Not only this, they provide assistance in

developing art galleries in the city. It would not be
long before they pursue professional courses to
take their interests to the next level.
Investment
About 63% of the ultra HNIs we surveyed

consider it a matter of pride to own and display
collectibles. Many prominent personalities have
Networking
20%
20%
long collected (sometimes for generations)

artifacts that represent Indias magnificent past
and its rich cultural heritage. In fact, for 28% of
the ultra HNIs we talked to, traditional values
drive their purchases.

It is time that these collectibles from exotic
A Mumbai-based family
has set up a foundation to
promote art and has opened
up their entire collection to the
public apart from providing
assistance in developing art
galleries in the city
wine collections, to expensive paintings, to classic

cars are looked at as passion investments.
Worldwide, wealth managers and consultants
track the value of these investments for their
clients. Although these are not a prominent assetclass in India yet, they are likely to become one,
very soon. Rising interest in collectibles among
Indias ultra-rich could open up these passion
investments as a new asset class.
41
42
Spends
SPECIAL FOCUS
SUCCESSION
PLANNING
Deciding the next in line
onflicts relating to succession are almost as old as

recorded history. Most famous Indian epics have
an undertone of problems related to, and the
importance of succession. Even as literature and
reality demonstrate how important this area is, Indian business

families have not really given this issue its due. Wealth can grow
manifold and be preserved for many generations if a well-
98%
of Ultra HNIs believe

in Succession Planning
81% of them give it high importance
defined and well-thought-out succession plan is in place.

Problems in succession planning take many forms The
Aurangzeb syndrome is a classic case of the potential heirs of
the family fighting over the succession of the family estate
something that recurs fairly regularly in corporate India. All
too often, we also come across the Dhritarashtra complex
where the patriarch or matriarch has a clear preference for one
family member, leading to problems among potential heirs. In
the past, we have seen cases where such a preference has even
taken precedence over merit.
As the concept of succession planning has moved far beyond
just dividing the gold amongst family members, and as
meritocracy plays a vital role in the right fit, finding the right
successor is becoming very important. In this section, we
explore recent trends and changes in succession planning
among Indias ultra HNIs.
43
Passing the Torch

As ultra HNIs move through various stages of
immediate responsibilities. This translates
their life and build growth strategies to deal with
into vision-building, better teamwork, and
the changing business environment, the issue
effective performance both for the successor
of succession becomes critical to ensure smooth
and the business.
functioning of their businesses, and for the

financial security of their family members.
Recently, a north-based industrialist went through

a feud over the familys wealth and business due
Today, most ultra HNIs understand that
to lack of a proper succession plan leading to
succession planning is a continuous and proactive
misunderstandings between family members.
process, rather than a reactive one. Their plan
Such episodes serve as a wake-up call for ultra
involves identifying potential leaders, grooming
HNIs and push them into planning for succession
them, and encouraging them to look beyond their
well in advance.
Motives of Succession Planning

Well-being of the family remains a major driving force
Ensure well-being of
immediate family
35%
Make family capable

and independent
30%
44
Ensure the well-being of

other stakeholders
Contribute to growth and

ringfencing family business
15%
8%
Reduce family /
internal disputes
12%
Spends
Methods of Succession Planning: Investing on the Future

With the changing education paradigm in
India, ultra HNIs are making way for the next
Time for Succession Planning
generation in their enterprises quite early on.
Ultra HNIs take about five years to plan efficient succession
Successors are being inducted in businesses at

an early age; they are getting involved across
43%
functions to understand nitty-gritties, and

to build relationships with key people in
35%
an organisation.
We have seen this in the past successors joining
22%
in as management trainees in prominent business

houses in India, receiving insight into functions,
and working their way to the top. This makes
the transition smooth for key parties involved
employees, family members, investors, and
other stakeholders.
During our interactions, we noticed that a few
1-2 years
2-5 years
Over 5 years
ultra HNIs are even working on a blueprint to

get all stakeholders on board to understand the
planning, including the type of business, size of
succession exercise. There are many factors that
company, and existing leadership structure. These
affect ultra HNIs in the process of succession
factors affect the organisation, as they influence

productivity, reputation, brand image, and
The son of a leading industrialist

completed his technology
management course from
a leading university in the
United States of America while
undergoing hands-on training in
their organisation
employee morale. Our survey revealed that 43%

of ultra HNIs prepare for at least five years to put
an efficient succession in place, while another 35%
take anywhere between two to five years.
Preparation for succession planning happens
majorly through a formal education seen in 45%
of ultra HNIs. For 22%, strategic involvement in
business decisions serves as a means for grooming
45
How do Ultra HNIs Groom Potential Successors?

Educating and strategic involvement in business decision are the most prevalent methods
3%
45%
Informal
Mentoring
Education
24%
6%
Documentation
of best practices
On-ground
Mentoring
22 %
Strategic Involvement
the next generation. Other ways include
These programs help participants understand
demonstration, exposure to business scenarios,
their businesses better, prepare them to sustain
and formal and informal mentoring.
through phases of transition, and enable them

to grow their businesses in an environment of
In successor
induction
they join in as
management
trainees and
work their way
to the top
46
Leading universities in India and abroad have
increased competition.
started offering entrepreneurship and familybusiness-management programs and a growing
Importantly, these programs benefit not just
number of ultra HNIs send their children and
the participating students, but also their family
family members to these programs. For example,
businesses. This is because through these
the son of a top industrialist completed his
students, other members of the family are able to
technology-management course from a leading
learn and understand from each other, thereby
university abroad while undergoing hands-on
enabling continued success and reducing conflicts
training within their company.
in a family-managed business.
Spends
Identifying the Right Candidate

Traditionally, succession planning among ultra
Daughters are becoming

an integral part of succession
planning. The daughter of a
leading industrialist recently
played an active role in business
expansion through acquisition
and has also led the companys
foray into new sectors
HNIs largely meant dividing assets among the next

generation, but it is not that simple any more. The
phrase is gaining a wider role and significance in
the current scenario. To find suitable successors,
ultra HNIs are making concerted efforts with
sophisticated methods and strategy. They are
devising elaborate models to sharpen their
succession and development practices.
Broadly, there are two approaches for succession
planning one, where ultra HNIs look at
members before drafting a succession-planning
harmonising expectations with the family
blueprint; two is more about dividing the empire.
The Pool of Potential Successors

Ultra HNIs often choose children and high-potential family members
54%
39%
4%
Kids
High-potential
family members
2%
High-potential
Non-immediate
external candidate family
1%
Friends
47
The first approach, while superior, is a difficult
are training their daughters and handing them
one due to the struggle involved in bringing
crucial roles. For instance, the daughter of a
all stakeholders on board; however, if successful, it
leading industrialist played a very active role in
leads to finding wider acceptance, an
business expansion through acquisitions, and also
undivided group with higher resources, a bigger
in her companys foray into new sectors. Another
balance sheet, and eventually, a bigger impact on
example is one of Indias richest families involving
the marketplace.
their daughter in the telecom business.
For instance, an infrastructure heavyweight
With changing times, business families are
recently took this approach to establish a family
becoming keener on finding the right person for
constitution, and to make each member of the
the top job. This would mean opening up to the
family understand relationships within the group.
idea of finding this person even outside the
He hopes that these moves will eventually lead to
family someone with professional skills and
effective succession.
necessary education.
Succession planning is becoming increasingly
Although currently, successors from non-
gender agnostic a major shift among ultra HNIs
immediate family and professionals are less than
is that they are trying to include their daughters
10%, the trend is likely to pick up. Recently, one
in their succession discussions. Previously largely
of India's leading consumer-goods companies with
ignored, daughters are now seen taking on
a long family history appointed an outsider to
active roles in their family businesses. Ultra HNIs
lead the group.
Finding the right person for the job, even an outsider

with professional skills and necessary education, is
taking precedence over keeping control within the family
48
Spends
Implementation of Succession Planning

Assessment is a key practice in effective succession
planning. There is no widely accepted formula
for evaluating the future potential of leaders,
How Ultra HNIs Plan their Succession

Most prefer planning for succession themselves
but there are many tools and approaches

that continue to be used today, ranging from
personality and cognitive testing to team-based
27%
interviewing and simulations.
73
Mode for Succession Planning
Close Confidants
Wills are the most common instrument
82% Will
18%
Private Family Trust
Involve
External Agency
In our survey, 73% ultra HNIs said that they prefer

planning their succession with close confidants.
Others look for advice from external sources
such as chartered accountants, consultants, and
wealth managers. People are also gradually
relying on professional estate planners, trustees,
and wealth advisors.
In a country where discussion of death was
virtually unheard of, Indians have now started
writing wills. The well-heeled, especially the new
ultra HNIs, have become savvier about preparing
for the inevitable and their favourite instrument
of choice for bequeathing their riches has turned
out to be the simple will. Trusts are now gaining
traction with many large corporate houses going

down this road.
49
Early Planning = Early Retirements

Counterintuitive as it may sound, Indian
to put in place succession planning for top
ultra HNI families are involving younger members
management and board positions in line
of their family right at the onset of succession-
with best global practices. With the regulator
planning discussions.
taking a keen interest in succession planning,

global best practices in this segment will soon be
The younger lot is more educated and open to
adopted in India.
ideas and concepts. Our survey disclosed that

70% of the ultra HNIs have commenced planning
Succession planning is not just being treated as
of succession at least two years ago, while 62%
an insurance policy for ultra HNI families focusing
of them revisit it at least once in five years with
on the continuity of their business it is slowly
the aim of incorporating the latest changes in
turning out to be a retirement plan for them.
the family. As SEBI ushers in a new regime of
Today, they are not waiting to turn 60 before
corporate governance, it has asked companies
they retire. In the past decade, we have seen a
How Long Ago did they Initiate Succession Planning?

Many ultra HNIs have initiated planning for succession
25
5%
Will start now
10%
%
Will start
later
2 years ago
24
%
10 years
ago
19%
17%
5-10 years ago
2-5 years ago

50
Spends
How Often do they Revisit their Succession Planning?

Most ultra HNIs visit their succession planning at least once in five years
38%
16 %
5 years
Never
19
%
1 year
27
%
3 years
number of ultra HNIs retiring early and choosing
and insurance schemes to secure the future for
alternate paths for their future. Most of them
themselves and their families.
are working on succession and retirement plans

simultaneously. They are keen to ensure that their
Many are seen working even after retirement,
life after retirement is not dependent on others.
and in some cases, their risk appetite and business
They are opting for various post-retirement funds
sectors undergo a change. Take for instance

an ex-head of Indias top conglomerate after
With a focus on corporate

governance, SEBI has
taken an interest in making
companies have succession
planning in place for
top roles
retirement, he has invested his personal savings in

ecommerce start-ups.
Some ultra HNIs prefer to enjoy the postretirement phase in pursuing their hobbies
and passions for example, an ex-banker from
Kolkata turned to freelance photography and
has exhibited his works at various national and
international forums!
51
PROFILE
Shaheen
MISTRI
Education is a
long, hard, and
human process
and its really
important that
we give kids the
opportunity and
time to be able
to meet their
potential
s Mistri is a well-known social activist,
maximise their potential and transform their lives.
educator, founder of the Akanksha
Currently, it reaches out to over 5,000 children
Foundation, and CEO of Teach For India.
through two models: the after-school model (where
Her dedication to her cause is awe-inspiring and
centres support each child by providing a strong
she strongly believes that quality education is the
educational foundation, help them have a good
only way forward for a better tomorrow for Indias
time, inculcate self-esteem and values, and assist in
underprivileged children.
planning for a steady-income livelihood) and the

school project model (opening high-quality schools
Akanksha is a non-profit organisation, which
for under-privileged children in partnership with
provides children from low-income communities
local municipalities).
with a high-quality education, enabling them to
52
Spends
Just seeing our children grow and change, and then going out
there and wanting to change the society that to me is really
where the power of the movement is. Our children as young as
5th, 6th, and 7th graders say that I will change my community
this is just incredibly fulfilling.
Growing up, Ms Mistri went to 10 different schools
children in its first year to 38,000 children today. In
in five countries. This kind of exposure perhaps
terms of employees, Akanksha has 200 and Teach
gave her a very early insight into exactly what she
For India has 250 and growing. Teach For India is
wanted to do with her life. Even as a young child
present in seven cities (Mumbai, Pune, Bengaluru,
of 12, Ms Mistri spent her summers volunteering
Delhi, Chennai, Ahmedabad, and Hyderabad).
with disadvantaged children. As a teenager, she
Akanksha has eight centres and 16 schools in
was already looking for volunteering opportunities
Mumbai and Pune the organisation celebrates 25
to work with children. When she visited her
years of existence this year.
grandparents in Mumbai, she was appalled by the

sharp contrast in the living conditions of the rich
Besides working for children, Ms Mistri says she
and poor in the city and decided to do something
is obsessed with animals, especially stray ones.
about it. The best way to bridge this gap was to
She is also very passionate about creativity and
educate children, she decided. In her own words,
art from film to music to fine arts to painting. She
My first organisation Akanksha started as a college
loves travelling and is an author. I have written a
project and a belief that education is important,
book for Teach For India last year called Redrawing
kids are important, and because I just enjoyed being
India and published a couple of children stories
with kids. Slowly, a community and classrooms with
about a little crocodile called Miss Muglee, which
disadvantaged children grew around me.
were illustrated by Akanksha kids, she says with an
Our goal is to
reach a million
children in five
years, which
is a massive
jump, but we
do not want to
compromise the
quality of what
we give our
children in that
process
indulgent smile.
In 2007, Ms Mistri met Wendy Kopp, the Founder of
Teach for America, and was inspired to start a similar
While Akanksha is not an impact investment,
initiative in India under the leadership at the core
Ms Mistri has valuable words of wisdom for the
of the solution model. Her Teach For India initiative,
education sector. Organizations becoming more
which she began after Akanksha had already
professional and being able to tell their story and
flourished for almost 17 years, was a result of her
operate at a scale this is a big opportunity, as it
desire to scale Akankshas model.
resonates with what investors want, she

concludes. In this sector, making an investor or
Teach For India's mission statement is that every
donor a partner in the larger vision and giving
child deserves to attain an excellent education. It's
them an opportunity to actually engage is a great
aim is to prove that no childs demographics should
idea, she says and adds that 2% CSR is a really good
determine their future. It has grown from 2,000
opportunity for the sector.
53
54
Spends
SPECIAL FOCUS
RENEWABLE
ENERGY
Committed to a greener lifestyle
or more than four decades, renewable energy has
been an important component of Indias energy
planning process. Social and economic growth are
top-priority for the government, and it is increasingly seen
using renewable energy to drive this agenda.
Ultra HNIs have always been enthusiastic about adopting and
promoting renewable energy. Their various initiatives have made
them frontrunners in adopting renewable-energy technology;
many have effectively integrated renewable energy into their
lifestyle and businesses. Popular programmes include water and
energy conservation, recycling and reusing plastic bags, and
waste segregation.
Energy efficiency has been included

as one of the eight missions in
the Prime Ministers
National Action Plan on climate
55
The Importance of Renewable Energy

Two renowned
ultra HNIs
adopted a
tribal village in
Odisha; they
installed solar
units with two
home-lighting
systems in
each of the 61
households
there
Ultra HNIs have a positive view on moving towards
lights, water-conserving fixtures and fittings,
the usage of renewable energy, both inside and
rainwater-harvesting technology, and external
outside their businesses. Most of them strongly
solar lighting.
believe in an eco-friendly lifestyle and strive to

reuse resources, to plant trees, and to use
Ultra HNIs have long realised the importance and
electric / alternate fuel cars. They also often assist
relevance of renewable energy as a sustainable
in preserving non-renewable energy sources for
option to cater to rising energy demands. They
emergencies / better uses.
majorly focus on initiatives such as preserving

and maintaining non-renewable energy sources,
Socially conscious and environment-friendly ultra
reducing and controlling pollution, and improving
HNIs are increasingly adopting green building
the environment.
practices to minimise the footprint of their homes

on the ecology, while maximising comfort. Beyond
They are also increasingly tying up with
the latest luxury bathroom fittings, marble floor
commercial and residential high-rises to install
tiles, and technology time-savers, the wealthy are
solar panels on rooftops, thus encouraging the
also investing in insulated roofs, automated sensor
usage of alternate sources of energy. This has not

only turned into a viable business model for ultra
How Many Ultra HNIs Believe in Renewable Energy?

90% agree that this is important for sustainable development
HNIs, but has also made the go green lifestyle a

coveted and fashionable one.
A few examples a Pune-based ultra HNI family
Agree
is marketing a line of highly energy-efficient

pumps, while a leading developer in Gurgaon is
Strongly
Agree
focused on making energy-efficient buildings by
55%
35%
using wood instead of aluminium for doors and
8%
2%
Somewhat
Agree
windows that reduce CO2 emissions.

Energy efficiency is being recognised as a
Neutral
low-hanging fruit in the countrys pursuit of

energy security, inclusive development, and
transition to a low-carbon economy. To fulfil
56
this, ultra HNIs are investing in employeefocused activities, such as campaigns to increase
Spends
Types of Renewable Energy Investments by Ultra HNIs

60% would like to be or are already engaged in initiatives such as solar power, bio-energy, and wind
15%
25%
30%
17%
Solar Energy
53%
23%
26%
Wind Power
Heat Pump
60%
12%
Bio Energy
51%
Direct Investment
18%
70%
Impact Investment
Evaluating
awareness, motivation, and involvement in
energy-efficiency impact. Many of them have
energy-management activities with an
moved towards making office buildings energy
ultimate aim of reducing the companys
efficient and retrofitting business processes. State
energy costs.
governments and mobile-app companies are

coming up with car-pooling features, which are
Major states in the country have recognised the
backed by ultra HNIs implementing similar systems
need for renewable energy and have set-up
in their offices.
large solar parks. Punjab, for instance, has setup

the worlds largest single-roof-top solar plant
An ultra HNI, who recently completed the
at a cost of `140 crores. Ultra HNIs find such
construction of his independent bungalow along
projects good avenues to increase their exposure
the East Coast Road in Chennai has installed
to renewable energy and usually form groups to
features such as insulated roofs and walls to
invest in such initiatives.
reduce heat ingress, automated sensor lights,

water-conserving fixtures and fittings,
They are also implementing operational and
rainwater harvesting technology, and external
maintenance practices that take into account the
solar lighting.
57
Investment in Renewable Energy: Trailing Growth

On an average, ultra HNIs invest `15 lakh on solar
Ultra HNIs are also giving up their rooftops to
energy per year; their bio-energy investments are
install solar power systems. This model is being
a close second at `12 lakh. These investments are
used by many solar power companies to increase
primarily towards solar rooftops and boilers and
their rooftop installation capacities. Industrial
wind-driven machineries.
establishments, commercial buildings, malls,

and large gated communities are key targets for
Drivers for Investments in Renewable Energy

Main reasons include upcoming sector, energy preservation,
stability of returns, and sector growth
14%
27%
15%
18%
29%
Energy Preservation
Specialised financing agencies are also promoting

renewable energy projects, while the government
23%
Level/Stability of Returns
13%
3%
Impact on Local Communities
Philanthropy
Rank 1
58
and / or distribution of power from renewable
provides operating subsidies, accelerated
15%
20%
allows a tax holiday for 10 years for generation
investors to the sector.
15%
15%
investments in renewable energy it permits
energy plants this has attracted many ultra-HNI
31%
Upcoming Sector
The government provides several benefits for

100% Foreign Direct Investment in the sector and
28%
34%
such installations.
Rank 2
Rank 3
A leading FMCG company

has tied up with a
Jabalpur-based cement
tycoon for burning its
solid waste in the kilns
of his cement plant to
generate energy
Spends
depreciation, and generation-based incentives
multiple opportunities for ultra HNIs to contribute
(GBI). These incentives have been one of the most
to this green cause while also making it a viable
critical factors in driving investments, especially
business model.
into sectors such as solar and wind power.

In January 2016, Indian Renewable Energy
States, such as Punjab, have inked MoUs worth
Development Agency Limited (IREDA) came out
`13,500 crore for investment in solar projects and
with tax-free secured redeemable non-convertible
signed pacts for setting up bio-ethanol plants
bonds. Ultra-HNI buyers displayed massive interest
worth `6,000 crore. This trend is spreading to
and the issue was over-subscribed to almost
other states such as Gujarat, thus providing
double the allocated value.
One of
Indias largest
automobile
companies
has installed
energy saver
units along
with feeder
pillars to reduce
its energy
consumption
High Earnings: Renewable Energy is the Next Big Thing

As Indias renewable energy sector marches from
Exciting business models are sprouting in this field
the fringes to the mainstream, ultra HNIs are spoilt
as the market potential grows with enough room
for choice by the numerous opportunities that it
for established inheritors and fresh entrepreneurs.
presents, all of which will multiply their wealth
For example, a Delhi-based organisation started by
and benefit the environment.
two young ultra HNIs is providing solar-powered

water-pumping solutions to meet agricultural
Besides renewable energy as an investment
irrigation, aeration, fisheries, and drinking-water
and business opportunity, ultra HNIs are
needs in off-grid areas.
avid followers of cost-effective technological

innovations and often actively collaborate with
In five years, they have expanded to 14 states, have
academic institutes that specialise in these types
2,200 projects on the ground, and are generating
of advancements.
revenue in millions each year already.
59
PROFILE
Vinod
KENI
As there are
more success
stories in impact
investing, its
familiarity
among the
investment
community will
grow
M
60
r Vinod Keni is the co-founder and
when he was introduced to this space and soon
partner at Peachtree Management
joined a firm that was looking at a new fund in
Advisors. He is also on the board of
this segment, which eventually ended up raising
Indian Angel Network. He is a man who wears
US$ 100 million. After this, Mr Keni started
many hats (impact investor, angel investor, and
looking at impact investing mostly from an angel-
management consultant). Surprisingly, he says
investing perspective because he realised it was
his journey into impact investing wasn't planned.
not just about raising capital, but more about
He was working for a large donor institution
the expertise provided to the entrepreneur and
Spends
the management team to build a sustainable
he puts it You need to pick it up carefully is
enterprise.
it solving a larger problem or need? Something

that people really want? Then the next question
Impact investing is challenging. You look
is if this is practical and commercially viable? Is it
for enterprises that you think are going to be
sustainable? He admits to shelving many ventures
sustainable, the attraction for mainstream
because they qualified mainly as philanthropic. He
professionals to join in is limited because of the
is not overtly optimistic about renewable energy in
longer gestation period, and it takes a much
India It will take some time, it still has significant
longer time to scale these companies up, he lists.
challenges in terms of scaling up.
The capital that comes into impact investing is a

more patient capital. You cannot come into it
He believes that impact investing funds should
and exit in two years. This is where experience
have returns of high 20s to mid-30s in four years
and expertise comes in, he believes.
(minimum holding period), but there are instances

where he has landed up with high teens or even
Earlier, we saw many people who had passion
single digits. As he puts it succinctly, This is like
and who wanted to make a difference, but now
any other venture fund one can have a few
we are seeing people with passion plus experience
ducks, a few singles, and a few home-runs.
to back that up. Experience and expertise makes

all the difference according to Mr Keni. Today,
Mr Keni believes that these segments
you are seeing a class of entrepreneurs who are
employability and skilling, financial inclusion,
more sophisticated and experienced it is a big
healthcare, sanitation, water, low-cost medical
boon. You now see experienced professionals who
devices, energy that are leveraging technologies
are stepping in and saying that there is a large
for people at the bottom of the pyramid, are likely
enough need and I know its a business that I can
to attract maximum impact investment. In fact,
make sustainable. Budding entrepreneurs and
his preferred sectors for investing are fintech and
experienced ones are now actually able to
financial inclusion.
The number of
companies that
would fail will
be high and even
the money lost
in this sector will
be considerable,
but these are just
cycles before the
sector matures,
and consolidates;
eventually, the
number of failures
will decrease
choose between creating another e-commerce

company, or an on-demand delivery company, or
Mr Kenis other interests include collecting
a social enterprise.
antique toy trains, travelling, and reading. He

likes travelling to offbeat locations and plans to
Social investing is still a fiercely debated concept,
go to Ushuaia, Argentina, for his next big holiday.
he reveals. He says he has had mainstream
A large chunk of his investments are in equity
investors tell him that all investing is eventually
currently, but he plans to shift more towards debt
impact investing. What he is very clear about is
as the years go by. His real estate investments are
the difference between impact investing and
likely to remain steady.
philanthropy; in the former commercial returns

are very important, in fact, they are a priority
only then does he consider if the venture will
make an impact. It seems to be a fine balance as
61
62
Investments
HOW THE ULTRA HNIs
INVEST
ADVANTAGE
REAL ESTATE
Less inclined towards equity
ver the last few years, the government has liberalised
foreign investment policies and created a very

favourable investment environment across all segments
of Indias economy. Both manufacturing and services
have received a boost under the initiatives 'Make in India', 'Start

Up India', and 'Digital India'.
In the past year, sentiment towards the governments
performance and policies has continued to be positive.
Actions such as RBI reducing interest rates, listing of smart cities,
and clearing several road projects have strengthened ultra-HNI
investments in the domestic market.
The investment mood has remained positive. While ultra HNIs
have been less inclined towards equity this year due to the
lacklustre market performance, they have increased allocation to
other segments such as real-estate, especially commercial, and
debt. They expect the investment climate to remain bullish on
strong economic growth.
63
Primary Business Remains Main Source of Wealth

Wealth Sources of Ultra HNIs Across Categories
Except for professionals, the primary business is the main source
Our survey revealed that this year the main source

of wealth for almost half of Indias ultra HNIs is
the success of the primary business; last year, this
figure was 41%.
57%
17%
14%
9%
There was also a corresponding decrease
29%
5%
3%
14%
Professional
Entrepreneur
41%
10 %
A quarter of the ultra HNIs we polled have

created wealth from the real-estate sector, while
for others the primary wealth source is personal
25%
8%
9%
Overall
16%
Sale of Business
Success in Business
Real Estate
Personal Income
64
income and equity investments.

Entrepreneurs and professionals predominantly
have a single source of wealth. However,
1%
Equity, ESOP
more interested in building long and sustainable

businesses.
48%
10%
Inheritor
source of wealth is through sale of business. In

conjunction, these trends indicate that they are
42%
39%
in the number of ultra HNIs whose primary
inheritors tend to diversify from their established
3%
businesses, which has led to wealth augmentation

from real estate for them.
A new category of entrepreneurs are also
successfully investing in social entrepreneurship
businesses that focus on sustenance. Due to their
passion and vigour, the impact investing segment
is rapidly gaining ground in India.
Investments
Real Estate and Debt Investments see an Increase

Indian ultra HNIs broadly invest across equity, real
asset classes real estate, debt, and alternate
estate, fixed income, and alternative investment
assets lending stability to returns. In the debt
assets. This year, the trend of increasing equity
market, tax-free bond issuances by public-sector
portions in ultra HNIs investment portfolio saw a
undertakings elicited a positive response from
reversal mainly due to the near 20% fall in Indian
ultra-HNI investors.
equities. Small-cap stocks, which were among

the top picks and performers in the previous two
Real estate investments, which fell last year,
years, took a hit this year.
saw an increase this time. The Real Estate

(Regulation and Development) Bill of 2015,
The stock markets dipped due to a variety of
which came into force this year, is widely
reasons including global events such as a sharp
expected to ease concerns around project
fall in the Chinese stock markets in just three
development and delivery and bring about
months, and a drop in foreign inflows into Indian
transparency and accountability.
stocks. While increasing participation of domestic

institutions countered the fall to an extent, the
Commercial properties are the biggest and most-
stock markets still saw a negative trend.
stable attraction in the real-estate market for ultra

HNIs, as they are proving to be more profitable
Realignment in the equity portfolio of ultra HNIs
than residential ones. Cities such as Mumbai,
led to a corresponding rise in the other three
Bengaluru, Hyderabad, and Delhi NCR are
Certain series of tax-free bonds issued in

FY16 such as from HUDCO, NHAI, and NABARD
offered a yield of 7.00-7.04%, which translates into a
pre-tax yield of 10.5%
65
Ultra HNI Investments Across Asset Classes

Equity allocation decreased, alternate investments rising
FY 2016
39%
11 %
45%
22%
28%
9%
FY 2013
38% 24%
9% 29%
20%
26%
FY 2012
FY 2011
34% 29%
7% 30%
35% 32%
4% 29%
Equity
FY 2014
FY 2015
Debt
Real Estate
34% 20%
9% 37%
Alternate
Investments
the hubs for commercial properties, with major
Commodity investments are also gaining the
domestic corporate offices and multinational
confidence of the ultra-HNI community. Impact
companies opening their branches there. The
investments (as part of alternate investments)
residential segment is also expected to pick up but
have also captured their imagination. With
with a lag as the demand in small centres picks up
strong economic growth expected in India
on increased interest from ultra HNIs.
over the next few years, the investment mood

continues to be bullish.
66
Investments
COMMODITIES
Most ultra HNIs invest in commodities, gold is a favourite
ommodities are among the worlds
largest financial markets. Initially
conceived as a hedging platform for
producers and consumers in local
markets, these markets now provide sophisticated
investment and risk-management opportunities
for ultra HNIs. Globally too, commodities such
as oil and gold have become favourites amongst
Government of India
started Gold Monetisation
Scheme under which
resident Indians can deposit gold
and receive gold bonds. This
scheme has piqued the interest
of ultra HNIs
institutional investors.
67
Exposure to Commodities
Of the five BRICS economies, four slowed or
prices, Indian ultra HNIs are using the
even contracted in 2015. Chinas economy
commodity markets to limit their exposure, and
continued to slow down and its move away from
also to make gains.
commodity-intensive activities weighed on global

trade and commodity prices.
Our survey revealed that 72% ultra HNIs invest

in commodities; of these, 40% have invested
Brazil and Russia, two large commodity exporters,
about 5-10% of their assets while 39% have
are in deep contraction that is also accompanied
11-20% exposure. The commodity markets in
by currency depreciation, above-target inflation,
India are growing, which means their potential is
and deteriorating public finances. In order to
huge, particularly because commodities are very
counter this volatility in raw material input
relevant to Indias economic growth.
How Much do Ultra HNIs Invest in Commodities?

49% of ultra HNIs invest more than 10% of their assets
11%
Less than
5%
40
5% -10%
68
20%
11%- 15 %
10%
19%
16%- 20 %
More than
20 %
Investments
Allocation of Investment in Commodities

According to our survey, 78% ultra HNIs
latest additions to this list. Apart from gold, 19%
prefer gold and silver for their commodity
ultra HNIs allocate funds to silver and 6% invest in
investments; out of these, 59% consider gold a
energy commodities, which is the next emerging
good investment opportunity, also because it is
sector globally. In line with this global trend,
traditionally regarded as auspicious.
commodity exchanges in India are also offering

energy products as a trading opportunity to
Investment in gold varies from jewellery, coins,
which the ultra HNIs are warming up and taking
bars, to ETFs. Gold certificates and bonds are the
restricted exposure.
Investment Allocation by Commodity

Gold and silver command large chunks at 59% and 19%
19
59
Energy
Silver
Gold
3%
Agri Based
Metals
%
Others
69
Sources of Commodity Purchases

To attain better returns from commodity
when it comes to energy-based commodities,
markets when multiple avenues are available
more than half invest directly through exchanges,
for purchasing them, ultra HNIs are taking more
online portals, and brokers.
informed decisions about performance and

investments. The introduction and evolution of
For agri-based commodities, 48% ultra HNIs
a strong regulatory oversight and framework in
prefer instruments that have an underlying
commodities has provided a fillip to the sector and
commodity as the driver while 39% prefer direct
boosted ultra HNI confidence levels.
investments through exchanges; the latter ratio

is lower than the former because of the relatively
Physical buying is the preferred purchasing
lower trading volume of exchange-traded agri
method for 80% ultra HNIs investing in gold and
commodities and trading restrictions often
for 74% of those investing in silver. However,
imposed to curb price inflation.
Where do Ultra HNIs Purchase their Commodities?

More physical buying in gold and silver; energy investments are mainly through exchanges
80%
13% 7%
23%
53% 24%
13%
39% 48%
74% 11% 15%

24%
Gold
Agri Based
Energy
Silver
Physical Buying
Metals
Direct Investment through Exchange / Portal / Brokers
70
38% 38%
Commodity Stocks
Investments
Future Investments: Commodities

With the merger of FMC (Forward Markets
Commission) with SEBI (Securities and Exchange
Board of India), the future of Indian commodity
markets is likely to be bright in terms of both
Preferred Commodities for Future Investments

Precious metals, for both current and future investments
investments and returns.

SEBI has initiated a number of measures to
34%
Gold
streamline the regulatory structure and processes

in these markets, all of which are towards
increasing market integrity and liquidity,
25%
Silver
thus helping the growth of the commodity

derivatives market.
Energy
(Crude Oil)
12%
As the number of commodities traded is

increasing, ultra HNIs are diversifying their
investment risk by participating in different
segments. This is an evergreen market, as it
involves trading of products that are as varying as
precious metals and agri products.
Agri Based
Commodities
12%
(Soya, Cotton, Jute, etc)
Metals
(Nickle, Lead,
Copper, etc)
9%
In our survey, 34% ultra HNIs believed gold is a

good investment opportunity for the future too,
Others
8%
while 25% picked silver.

Energy-based commodities (such as crude oil)

and agri-based commodities (such as soya,
from foreign investors, once permitted, will also
cotton) were preferred by 12% ultra HNIs each.
boost market liquidity. With India set to become
Introducing index derivatives and commodity
one of the fastest-growing economies, ultra HNIs
options would be a great step towards
will continue to view commodities as a good
broadening the market. Potential participation
investment opportunity.
71
72
Investments
IMPACT
INVESTMENT
The Fortune at the Bottom of the Pyramid
he ultra-rich have almost always been great
philanthropists. Their desire to share their bounty and to
do good for the greater society is ingrained and deeprooted. However, for the last few years, mere charity has
not been enough to satisfy their altruistic propensities.
They want to build enterprises that not only create a positive
difference in society, but ones that are self-sufficient,
economically viable, and lasting; essentially, sustainable social
enterprises. This is the cornerstone of impact investing, which is
a growing trend among the elite.
Through impact investing, ultra HNIs derive twin benefits one,
investing in ventures that provide good returns (albeit over a
longer timeframe) and two, the satisfaction of having created
enterprises that will make a lasting social difference, a feeling
that is hard to put a price tag on. This section explores the
trends in ultra-HNI impact investments.
73
Almost Half are into Impact Investing

Impact
investments is at
a nascent stage
in India and
is seeing fastpaced growth
due to interest
from ultra HNIs
The impact investments segment, almost unheard
have exposure to these investments. This could be
of until a few years ago, is receiving close scrutiny
primarily because of their experience working in
of late. It seems to have become very popular
or being associated with some of these sectors.
among ultra HNIs; nearly half of the ones we

surveyed had some exposure to this novel
Among inheritors, 50% said they have an
investment arena.
exposure to impact sectors, mainly as a

diversification avenue from their core businesses
This segment not only satisfies the ultra HNIs
that also gives them high returns.
quest for new niche avenues for investment, but

also delivers the satisfaction of wealth creation
Among entrepreneurs, only 37% had an exposure;
while making a progressive difference to society.
they said it was difficult because these kinds of
Though the sector is at a nascent stage in India,
investments might require their involvement (in
it has seen fast-paced growth over the last few
addition to capital), which proves cumbersome.
years. While the general interest for impact
However, established entrepreneurs are likely to
investments is high, professionals seem to have
show inclination towards such investments, our
the highest inclination, with 67% saying they
survey revealed.
Nearly Half of Ultra HNIs have Exposure to Impact Investments

More professionals tend to have exposure to these investments
37%
50%
Entrepreneur
Inheritor
74
67%
Professional
44%
Overall
Investments
Sectors in Impact Investment

Impact investments target companies catering
Our interactions revealed that most ultra
to basic needs in an effective way, which would
HNIs that already have an exposure to impact
otherwise have remained unfulfilled.
investments end up increasing their exposure.

Typical investments in this segment were
We saw in our survey that most ultra HNIs are
below `50 lakh for financial services and clean
inclined towards three main sectors within impact
energy, but up to `1 crore for
investing financial services, clean energy, and
affordable housing.
affordable housing. This preference also translates

into on-ground investments, with microfinance in
financial services being the hottest sector within
impact investing.
Successful exits in microfinance coupled with
good returns have added to the sectors allure.
Sector-Wise Preference for Impact Investments

Financial services, clean energy, and affordable housing are favoured
85%
Financial Services
The Reserve Bank of Indias recent mandate to

a few microfinance institutions to set up small-
Clean Energy
82%
Affordable Housing / Sanitation
82%
finance banks has translated into renewed vigour

and interest in the sector with prominent Indian
family-owned companies actively investing in the
sector. Additionally, as seen in the lifestyle section,
the interest of ultra HNIs in clean energy reflects
in their investment preferences this is also
among the top sectors for impact investments.
RBIs recent mandate to

set up small finance banks
has translated
into renewed vigour and
interest in the sector
64 %
Affordable Health
Affordable Education
Sector
49 %
Rural Supply Chain
49 %
Technology Services
targeting BoP Space
47%
75
Drivers of Impact Investments

Major
considerations
for impact
investments
included
efficient use
of capital and
efficiency of the
company
Capital pumped into ventures that created a
nature and relatively small size (of the investee
social change or into social entrepreneurship
companies), efficient use of capital and efficiency
ventures was once considered not-for-profit;
of the investee company is becoming a major
however, this view is gradually changing. The
consideration. Due to the level of interest from
impact investments space is receiving traction
ultra HNIs in this segment, wealth managers have
from the ultra-rich in recent times key drivers
started incorporating impact investment in their
for this are attractiveness of the sector and
suite of products.
stability of returns. Other drivers include the

social and environmental impact that these
The policy push from the government in terms
investments create. While impact investments are
of National Solar Mission (to promote solar
expected to provide stable earnings, they typically
energy) and Housing for all by 2022 (to provide
have higher gestation periods and are turning
affordable housing) are also likely to have a
out to be medium to long-term investment
positive bearing on the interest levels of ultra HNIs
avenues for ultra HNIs. Given their prolonged
in this space.
Key Drivers for Impact Investments

The ultra-rich mainly look at sector attractiveness and stability of returns
13%
21%
23%
31%
Sector Attractiveness
Stability of Return
16%
34%
Social Impact
6%
27%
16%
13%
Energy Preservation
Environmental Impact
First Sector Preference
76
Second Sector Preference
Investments
Investment Modes
Impact investments predominantly happen
Impact Investment Channels
through three key routes private equity, venture
Private equity is the most common mode
capital, and hedge funds. Our survey showed

that 54% of ultra HNIs preferred the privateequity route for making impact investments
(an established mode), while 32% preferred the
venture capital route for making bets on new
initiatives.
54%
Interestingly, they favoured the private-equity

route for investments in financial services and
clean energy (where companies have some
vintage), while the venture capital route
was popular for affordable housing (where
32
Private Equity
entrepreneurs fresh approaches towards

providing such housing took precedence).
Venture Capital
Our survey revealed that ultra HNIs expect
14 %
investments through both venture capital and

private equity routes to pick up in the future. The
hedge fund route was not popular very few
Hedge Fund
were looking at that option.

Global funds that have an

impact investment focus
are setting up shop in
India and bringing in their
expertise in managing
these companies
Another avenue that was rising in popularity

among ultra HNIs was direct investments through
their family offices. These family houses
independently scout for opportunities and
conduct their own due diligence before investing
into ventures.
77
PROFILE
Roopa
KUDVA
I am deeply
inspired by the
entrepreneurs
we fund and
work with every
single day. They
are young,
idealistic, and
know no fear,
deviating from
past generations
in their altruism
and singleminded focus
on improving
society
78
edicated, passionate, enlightened, driven,
has chosen to enter the relatively new impact
and visionary these are just a few of Ms
investing sector. Since 2015, she is a partner and
Roopa Kudvas best qualities, all of which
Managing Director of Omidyar Network India
are currently focused on her latest undertaking
Advisors, the India arm of the Silicon Valley-based
impact investing.
philanthropic investment firm.
Following a 23-year career with rating agency
Her transition to impact investing after such a
CRISIL including eight years as CEO, during
long stint in a ratings and analytics firm stem from
which she successfully grew the rating agency
her desire to make a meaningful and sustainable
into a diversified analytical company, including
difference in peoples lives. As she puts it, I knew
proprietary research outside India Ms Kudva
it was time for me to do something different, and
Investments
I hoped to find a position where I could leverage
enable greater access to basics such as jobs,
my skills and capabilities to make an impact on the
education, healthcare, transportation, and
world.
financial services. This combination of momentum

and a supportive environment makes it a
Before assuming this new role, Ms Kudva was
phenomenal time for impact investment and
not very familiar with impact investing, but the
offers huge opportunities both for Omidyar
more she learned about Omidyar Network, the
Network and other such companies. Her company
more she realised that this was the model she had
follows a flexible capital approach. She says, We
been seeking. The organisation leverages both
use commercial investing instruments when they
for-profit investments and non-profit grants with
are appropriate and more patient vehicles for
an ultimate goal of driving sector-level change.
problems that dont lend themselves as well to
This gives us the flexibility to support the best
traditional instruments. It focuses on investments
entrepreneurs and organisations, no matter how
in five areas: emerging technology, education,
they are structured, she says. Ms Kudva says this
financial inclusion, governance and citizen
model is incredibly powerful, and she is confident
engagement, and property rights.
that it will provide her with the platform that she

desires. I was impressed with Omidyar Networks
Ms Kudva believes that as the industry continues
team of incredibly accomplished and driven
to gain momentum worldwide, not only will
people if they chose to dedicate their careers to
India receive more impact investing interest from
impact investing, I knew it had great promise.
foreign entities, but there will be a considerable

increase in domestic investments as well. In her
She believes that impact investment is coming
opinion, sectors that are likely to benefit most
of age in India. I can confidently say that
from this growth include property rights, mobile
impact investings time is now especially here
money, financial inclusion, and education and
in India, she reiterates. We have an incredibly
skilling. The proliferation of smartphones in
favourable ecosystem for entrepreneurship:
India has been remarkable, and has dramatically
funding availability for start-ups has increased,
improved access to education, jobs, and
government policies are encouraging innovation
healthcare, offering incredible opportunities
and entrepreneurship, and our best and brightest
for investors looking for business models that
students are choosing entrepreneurial paths. We
have a clear social benefit, she says. Her firm,
also have significant drivers of social impact that
Omidyar Network, is committed to doubling its
are gaining momentum: more and more people
India investments to US$350 million by 2020.
opening bank accounts, increased opportunities
We encourage other HNIs and families to join
for skills training, and perhaps most significantly,
us in deploying their capital in investments that
a remarkable penetration of mobile phones that
produce financial returns alongside significant
connect people.
social impact, she concludes.
Impact
investing is at
a tipping point.
India already
leads the region
in number
of impact
investments,
and we believe
that trend will
continue
She believes that growing smartphone

penetration and innovative business models
79
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and exclusion of liability which operates to the benefit of Kotak Mahindra Bank Limited ('Kotak'). Kotak does not guarantee the accuracy, adequacy or
completeness of any information contained in the report and neither shall it be responsible for any errors or omissions in or for the results obtained from
the use of, such information. No third party whose information is referenced in this report under credit to it, assumes any liability towards the user with
respect to its information. Kotak shall not be liable for any decisions made by the user based on this report (including those of investment or divestiture)
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* The report belongs to Kotak. Any third party brands, names or trademarks contained in the report belong to the relevant third parties.
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80
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THE INDIAN ULTRA HNI

Kotak Wealth Management Top of The Pyramid India Edition 2016

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THE INDIAN ULTRA HNI

we have profiled four unique individuals whose

emerged one of the strongest larger economies

ventures and investments have set out towards

in the world, despite bumps such as the stress

sustainable and positive changes.

in the banking sector and a choppy stock

Our annual survey delved into the details of

positivity flowed through into this year (Optimism

another interesting development from treating

Uninterrupted) with reforms taking root, inflation

death as taboo, Indias jet set has started facing

under control, and economic growth looking up.

the inevitable head-on and is actively providing

Our annual report, Kotak Wealth Managements

employees, and dependents through succession

Top of the Pyramid (2016 edition), continues to

planning initiatives. Top of the Pyramid looks at

capture the mood of the ultra HNIs in India in the

the various means that the ultra HNIs employ to

context of the countrys changing socio-economic

plan for progression.

landscape. Top of the Pyramid remains the last

As always, Top of the Pyramid takes you through

Indias most wealthy. In addition to analysing the

the extraordinary and remarkable lives of Indias

spending and investment patterns of the

ultra HNIs that continue to stay firmly at the helm

ultra HNIs, for 2015, Top of the Pyramid also covers

of Indias development journey.

their increasing interest in art and collectibles, and

The edition has looked at the growing tendency

TOP OF THE PYRAMID 2016 | Kotak Wealth Management

INSIDE THE REPORT

About the report

TOP OF THE PYRAMID 2016 | Kotak Wealth Management

behaviour in apparel and accessories, art

Managements annual publication that

and paintings, and wearable devices. The

covers the spending, investment and

special focus of this years edition is collectibles,

lifestyle patterns of ultra-high-networth

renewable energy, succession planning and

individuals (HNIs). Kotak Wealth Management,

the private banking arm of Kotak Mahindra Bank,

Making of Top of the Pyramid 2016

Young LLP (EY) for the report.

emerging cities and small towns continue to

Feedback Consulting for the survey to study and

form a significant part of the Indian ultra-HNH

analyse ultra-HNI trends. For its projections, EY

population. We found that besides the top-four

used parameters such as GDP growth, savings and

metro cities, non-metro cities such as Bengaluru,

inflation rates, past and projected financial and

Ahmedabad, Pune, Hyderabad, Nagpur,

non-financial asset-class allocations, and returns.

and Ludhiana contribute 45% to the Indian

With the advent of improved government

This year saw a

policies and reforms, both accomplished and

The current report is a culmination of insights