This report comes from this week’s CNBC “Inside India” newsletter, which brings you timely, insightful news and market commentary on the emerging powerhouse and the big players behind its meteoric rise. Like what you see? You can subscribe here.
India is mourning the death of visionary industrialist and philanthropist Ratan Tata.
The former Tata Group chairman is best known for catapulting the storied salt-to-software conglomerate onto the global stage through a series of high-profile acquisitions.
His strong business acumen made him one of the richest tycoons in India.
The billionaire ranks 421st on the list IIFL Wealth Hurun India Rich List 2022based on his net worth of approximately 38 billion Indian rupees ($452 million). Another list consists of Fortune India-Waterfield His net worth is INR 16,040 crore, a figure that includes his stake in Tata Sons, Tata Steel, Tata Consultancy Services, Tata Motors and Titan Corporation.
Ratan Tata and the Ambani and Adani families have become household names due to their wealth and influence.
Yet they are increasingly underrepresented among the South Asian powerhouse’s growing population of super-rich people.
Newly wealthy people
“The old school of thought was that the rich were the Tatas, the Bilas or the Ambanis,” said Himanshu Kohli, co-founder of Multifamily India. “But that has changed now. ——The rich are not just the leaders of traditional business groups.
In an interview with CNBC’s Inside India, Kohli pointed out that India’s rich now come from multiple industries.
“Whether it’s among sports arenas, movies, celebrities, investment bankers or private equity professionals, there’s a lot of money being created,” he explained.
Kohli noted that professionals who have “created tremendous value” in their jobs or organizations are now moving up the ranks. These people are typically in the C-suite and can “generate between $50 and $200 million in lifetime wealth.”,” he said.
Another category of people who achieve wealthy status are “owners of public companies who sell part of their shares when the stock market rises, owners of hitherto unlisted businesses who sell shares in initial public offerings, and founders of startups who sell their businesses or shares People” Pramod Gubbi, co-founder of Marcellus Investment Managers, said:
The comments come as more Indians are choosing to set up their own companies rather than work for an organization. Data from the Lee Kuan Yew School of Public Policy, National University of Singapore It was revealed that the number of new startups in India increased from about 20,000 in 2021 to more than 34,000 in 2023, an increase of 71.5%.
Many Indian startups are taking advantage of the private equity boom by selling shares ahead of the 2022 funding winter. Others are now taking advantage of India’s IPO boom to cash out of their startups in hopes of reaping the benefits.
“Before the funding winter hit, many startup founders created wealth by selling stock. This gave them a pool of capital to invest and became active investors in financial markets. Other companies are now going public and earning substantial Benefits. Both moves bring benefits to founders.
Elsewhere, investment managers have observed that individuals of all ages and professions have benefited from the rise in Indian stocks over the past three to four years.
The Indian stock market surpassed Hong Kong at the beginning of the year and became the fourth largest stock market in the world. Markets have been rising steadily since then, with the BSE Sensex index – which represents the country’s 30 largest and most traded companies on the Bombay Stock Exchange – up about 12% so far this year, while the benchmark Nifty 50 index is up 13.8%.
What is ‘rich’?
Wealth management institutions do not have a fixed definition of “rich”. However, the generally accepted threshold among high net worth individuals is INR 500-250 million. Kohli said individuals with wealth exceeding INR 25 crore belong to the ultra-high net worth segment. At the same time, he added, those with wealth between INR 10-50 million belong to the wealthy class.
India’s ultra-rich population – People with a net worth of at least $30 million – will increase to 13,263 by 2023, a 6.1% increase from the previous year, According to Knight Frank. The report said this number is expected to surge by 50.1% between 2023 and 2028, making it the fastest growing country for ultra-high net worth individuals in the world.
Kohli estimates that the ultra-high-net-worth population is growing at 10% a year, while the HNWI population is growing at 16%.
“This means that every few minutes, one high-net-worth individual with an estimated wealth of US$1 million is born in India, and three ultra-high-net-worth individuals with an estimated wealth of over US$30 million are born every day. This is what is happening in our society today. The ride.
Also interesting is the change in age characteristics of these individuals. Historically, the average age of India’s wealthy has been over 50, Marcellus’ Guppy said.
Another trend, he added, is that they don’t necessarily live in the country’s metropolitan areas. “Most wealth accumulation occurs in big cities. Having said that, I think the wealth management industry is also penetrating into second- and third-tier cities.” Gubi said. Examples of these cities include Pune, Hyderabad and Ahmedabad.
In addition to the city center, he also sees the emergence of wealthy people in industrial areas such as the suburbs of Chennai, which “are becoming prosperous, especially with the growth of manufacturing”.
The driving force behind India’s wealth
India’s affluent population has grown in tandem with the country’s economic progress. If the South Asian giant continues on its current growth trajectory, it is expected to become the world’s third-largest economy by 2027.
“The Indian economy is doing well and the stock market is doing well. “China is the only economy after the United States that has consistently created wealth in the stock market since liberalization,” Gubi said. He added that the country’s prosperity benefits both businesses and individuals as “wealth increases.” “accumulation. “
The investment manager noted that another factor driving the rise of India’s rich is a shift away from physical assets such as gold and land towards financial assets such as stocks, mutual funds and alternative investments. He said the measure was driven in large part by reduced funds generated by tax evasion and unaccounted real estate transactions.
The good news, he added, is that the move into financial assets has led to “exponential” growth in wealth because it generates higher returns.
The influence of wealthy people
India’s large number of wealthy people are crucial to the country’s development. Their outsized impact on consumption patterns and investment behavior relative to the size of its population reflects India’s economic story.
Malcolm Dorson, senior portfolio manager of the Global Asset is one of the largest foreign asset management companies in India.
Looking ahead, he expects a wide range of industries, from wealth management to automobiles, healthcare, real estate and education, to benefit from this wave of premiumization.
“You see a lot of ultra-high net worth individuals and wealthy individuals investing in things like luxury cars Benz and Volvo Titan’s high quality jewelery and private hospitals such as Apollo Hospital. So that’s India’s opportunity to grow as more and more people become wealthy.
About The Author
