India's has the 12th largest population of high net worth individuals (HNIs) in the world, according to a recent report. HNIs in this report are defined as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables. These include successful professionals, as well as entrepreneurs who have ridden the wave of stock markets, ESOPs, real estate, and the building &/or exiting their business. Such HNIs in India have doubled in last 3 years, and are increasingly looking for alternate asset class.
According to a World Wealth Report by Merrill Lynch Global Wealth Management and Capgemini, it is the second straight year in which India's HNI population growth has been among the top.
“India's HNI population grew at 20.8% to 153,000 compared with 126,700 in 2010. This is followed by a huge growth of 50.9% in 2009” said the report. It added HNIs continued to benefit from a robust economy and strength in other key wealth drivers such as equity market performance. At the Angel Networks we have also seen the number of Angel investors doubling in last 2-years.
Crisil Research has defined an ultra high net worth household (ultra HNH) as having a minimum average net worth of Rs 25 crore. According to reports, in the year 2010-11, the number of HNHs in India was estimated at 62,000. The number is poised to more than triple to 219,000 households by 2015-16.
The report brought by Merrill Lynch suggested that HNIs in India have more than 31% of their assets in equities, just above the global average of 30%. HNIs in China have the lowest allocation to equities at 14%. These trend are encouraging, YourNest plans to channelize the risk capital to the start-ups while offering an alternate asset class to the HNIs.
A latest study shows the increasing trend towards newer asset class by young HNIs. Alternate investment options that are now emerging include Professionally Managed Portfolios by Private Equity, Venture Capital, and Angel Funds. A balanced portfolio includes this alternate asset class representing superior returns adjusted for higher risk.
The focus of the Angel Fund is investing in un-listed companies. The investment may start at an early seed stage and continue investing in promising companies at various stages of their growth, while enabling them to attract the attention of VC, PE or a strategic buyer for future growth.