Yet another firm new to the private-wealth scene in Asia has been readying itself to compete for business, both on its home turf in India and in the UK and US.
Following the recent hires of Nikhil Kapadia and Kartik Kini from Deutsche Bank and Ritu Jain from Morgan Stanley, Avendus Capital has lured more wealth-management specialists from international firms. The Mumbai-based financial services company also plans to open an office in Hong Kong or Singapore later this year.
Munish Randev will join Avendus on April 12 in Mumbai as executive director and wealth-management product head. He moves from US asset manager Fidelity, where he held roles both in asset management and distribution, including head of products and strategy in India. Before that, Randev spent six years with ABN Amro as head of investment services. Fidelity says it is in the process of replacing him.
Deepak Yachamaneni joined Avendus on April 2 in Mumbai to head the real-estate product function. He was previously chief executive of a real-estate family office in Mumbai.
In Delhi, vice-president Julius Amrit and associate Shilpi Grover both started on April 1 as relationship managers, having moved from Morgan Stanley Private Wealth Management in Delhi.
Morgan Stanley has not named replacements for Amrit or Jain, but Grover has been replaced in his client-servicing role by Anshu Jain, who arrived from Citi Wealth Advisors in February, say sources familiar with the matter.
With regard to Avendus's planned Southeast Asia office, the location will largely depend on finding an individual "with the right DNA" to run it, says Kapadia, chief executive of the wealth-management business.
Kapadia joined Avendus in January from Deutsche Bank, where he helped build the firm's onshore Indian private wealth practice in 2007 and 2008. He then moved on to Singapore to take up the role of chief operating officer and head of business development for the onshore wealth management business.
Meanwhile, Jain and Kini joined the team as executive director and chief administrative officer in October and February respectively.
Jain heads an eight-strong team in Delhi and is responsible for north India and parts of west and east India. She was previously market director at Morgan Stanley in Delhi, where she helped set up the wealth-management business. She has also worked with UK firm Barclays as zonal head for the premier banking division.
Kini has 14 years of experience in the financial-services industry. Most recently, he was part of the India country management team at Deutsche Bank where he was responsible for governance of key India management committees and the management of risk and cost issues across all the Deutsche Bank's franchises in India.
Kini was part of the team that set up the wealth management platform at both Deutsche Bank and DSP Merrill Lynch. He was also deputed to implement technology and processes in Deutsche Bank's Australia and Taiwan offices.
Deutsche Bank says it does not plan to replace Kapadia or Kini.
Avendus has a total headcount of 130 and offices in London and New York, which opened last year. Kapadia says it would be hard to say just how large the firm will grow in terms of headcount in the coming years.
He expects Avendus to have $2 billion in assets under management in the next three to five years, with a large percentage of these assets coming from non-resident Indians (NRIs). He says he would like the mix to be 50% NRIs and 50% onshore.
As for how the company will attract clients, Kapadia says companies such as Avendus hold a significant advantage over the "bulge-bracket firms" in that "many of them are confronted with the reality of reinventing their business models".
Customers are now looking to go back to basics in terms of investments, he adds, and are shunning exotic investment products, as a result of which they have "lost significant sums of money".
He refers to products such as Lehman Brothers-referenced minibonds and accumulators, which effectively ratchet up exposure to equities as stock prices rise, but leave clients open to big downside losses in the event of a correction. Hence the larger firms are less able to rely on the bigger margins they could previously derive from more sophisticated products, he adds.
Kapadia also points to the fact that the larger financial groups are dealing with issues over staff remuneration and having to change the way they compensate employees. "Indian firms like us don't have such baggage, so we can pay top-dollar compensation," he says, adding that he is seeing experienced bankers moving from -- or considering moving from -- international players to Indian firms as a result.
Another plus point for Avendus and smaller companies like it is that products offered by larger firms are taking a longer time to gain approval than they used to, says Kapadia.
Moreover, many of the US bulge-bracket firms, for example, are not in a position to deal effectively with NRIs due to their internal levels of bureaucracy, he adds.
Having said all this, Avendus lacks the reach and established customer base of its larger rivals. And it faces stiff competition both from home-grown Asian operations (think Bank of Singapore, recently formed by OCBC's takeover of ING's Asian private bank) and from firms that are new to Asia and expanding in the region -- Switzerland's BCGE and BSI spring to mind.
Such players may not be focusing so heavily on the NRI segment, but that's not to say they won't attract overseas Indian business.