BNP moves on India’s growing wealth market

Thomas Coyle

30 October 2005

French asset manager in joint venture with Indian fund manager Sundaram. France’s BNP Paribas Asset Management (BNP PAM) plans to take a 49.9% stake in Indian mutual-fund manager Sundaram Asset Management, a subsidiary of Mumbai-based Sundaram Finance. The French asset manager expects the new joint venture – Sundaram BNP Paribas Asset Management – to make it a bigger player in India’s fast-growing retail and high-net-worth investment space.

“The Indian market is one of the most exciting and rapidly developing markets in the world,” BNP PAM chairman Gilles Glicenstein says in a press release. “It has already shown substantial growth and has potential for much more.”

In the five years through 2003, total private wealth in India increased 123% to $177 billion, according to a study published earlier this year by Datamonitor, a London-based market research firm. Over two thirds of that personal wealth is in the hands of India’s 618,000 “mass affluent” and high-net-worth individuals – a category growing at an annualized rate of 17.6%. In India a mass-affluent individual has investable assets of between $50,000 and $299,000, according to Datamonitor; Indians in the high-net-worth bracket have at least $300,000 in investable assets. By 2008, the study says, mass affluent and high-net-worth individuals will number a little less than 1 million and hold assets worth about $200 billion all told.

Big picture

“There are certainly opportunities to be had in the Indian wealth market,” Datamonitor head of Asia-Pacific wealth-management analysis Alan Shields says in a March 2005 press release. “ big-picture strategic vision to provide wealth-management services around the globe.”

Though there are no short-term plans to make FundQuest’s third-party mutual fund and separately managed account platform available to Indian sponsors, Del Col says that could change. “Right now we’re concentrating on the U.S., and on exporting our technology and know-how to Europe,” he says. “But in a year or two, who knows?”

BNP PAM's stake in Sundaram Asset Management falls into its BNP PAM New Markets group, which manages about $15 billion in developing markets, including those of Argentina, Brazil, China, Morocco, South Korea and Turkey. All told, BNP PAM manages about $270 billion. Sundaram Asset Management manages about $623 million.

BNP PAM is a unit of Paris-based BNP Paribas. In one way or another the bank has been in India since the 1860s. Its BNP Paribas India unit provides corporate and investment financing as well as private banking services. –FWR