India’s millennial and Gen Z heirs are redefining family wealth. Startups
This report is from this week’s CNBC’s “Inside India” newsletter, which brings you timely, insightful news and market commentary on the emerging powerhouse. Subscribe here.
The big story
Rajat Mehta, scion of Mumbai-based Mehta Group, walked out of the listing ceremony of Billionbrains Garage Ventures or Groww, on Wednesday, feeling vindicated.
The company he backed in 2016 as an early-stage investor, at a valuation of roughly $1.3 million, debuted at $8.6 billion on the National Stock Exchange.
The 36-year-old felt a sense of pride after his father, Rakesh Mehta, told him, “Let’s find the next Groww to invest.”
Coming from a business family whose fortunes were built on advisory, wealth management and brokerage services, the Mehtas traditionally preferred the comfort of listed companies.
But it was the younger Mehta who pushed the family toward investing in unlisted assets and startups when he joined the business in 2013.
“The first startup I invested in went bust within three months,” he recalled. “But I learnt from that and kept on investing.” He has now invested in 35 startups, including some valued at over a billion dollars and are in the process of being listed.
DELHI, INDIA – DECEMBER 2 : Residential area in Delhi, the capital of India on December 2, 2018 in Delhi, India.
Frédéric Soltan | Corbis News | Getty Images
The millennial is part of a broader shift among wealthy Indian families who are investing in startups.
India is on the cusp of an unprecedented intergenerational wealth transfer, with an estimated $1.5 trillion expected to change hands over the next decade, according to a report by Julius Baer and EY in June this year.
Between 2018 and 2024, the number of family offices in India rose more than 500% to over 300 from 45, the report said, citing a separate study. Another measure of rising wealth — the number of ultra-high-net-worth individuals, or families with assets above $30 million — also increased to roughly 13,000 in the same period.
The true number of family offices in India could be five to 10 times higher, according to multiple wealth managers that I interviewed for this newsletter.
The next investors
The next generation of these wealthy families is typically well educated, often with international degrees, and may be reluctant to pursue the traditional family business or remain unconvinced about their growth prospects, Vikrant Agarwal, managing partner of Delhi-based Proxima Capital Services, told me.
Many of the old, affluent families, especially those from smaller cities in India, still hold much of their wealth in physical assets like land and gold. Once those physical assets are converted into financial assets, the number of family offices in India will rise, said Shailesh Balachandran, founder of TriGen Wealth.
India’s “new rich” are emerging from startup employees cashing in on stock options and returning nonresident Indians bringing back wealth, and a booming stock market. On the old money side, baby boomers are…
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