The trend is clear. India’s Asset Management Companies (AMC) are poised to gain enormously as hordes of savers move money from low-yielding bank deposits to high-return stocks. Monthly inflows of Rs 35,000–Rs 40,000 crore, across asset classes, are now par for the course as are average inflows of Rs 25,000 crore into Systematic Investment Plans (SIPs). And while there are 500 million Indians who have linked their PAN with Aadhar numbers, only 50 million invest in mutual funds.
If the penetration of mutual fund units is low, the entry barriers are lower. The minimum capital required to float an AMC is only Rs 50 crore and is one reason why the queue for AMC licences is getting longer. Never mind that there are already 47 players in the game and that US giant Blackrock is stepping into the market.
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The new entrants are convinced they will eke out their shares. Some are leveraging their brands, others their digital franchises. And some like Aashish Somaiyaa, CEO, WhiteOak Capital AMC believe they can play the changing mindsets. “Earlier people may not have been so familiar with the category so they would buy the brand. But now it is about performance. The market today is more meritocratic,” he says. White Oak has been able to mop up about Rs 15,000 crore of equity assets in a little over two years.
Indeed, technology today is important. While Ganesh Mohan, MD& CEO, Bajaj Finserv AMC may have inherited a good brand, he also plans to use top-class technology for both investors and distributors. “We will also offer differentiated products,” Mohan says.
Ankit Bihani and Param Subramanian at Nomura estimate the industry AUM (assets under management) can grow by a compound 18% over FY24-30. They expect the top ten players to hold on to their combined share of close to 78%.
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The reality, as Somaiyaa points out, is that the top players have been losing share. For instance, in the active equity and hybrid schemes (excluding arbitrage schemes) the share of the top ten AMCs has come down from 80% to 70% in the ten years to September,
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