IIFL Group should not require any further dilution in near term: Nirmal Jain

The outlook for wealth business in India is excellent as old wealth managed by family chartered accountants is now coming under professional management, said Nirmal Jain, chairman, IIFL Group, a day after the group’s wealth management firm raised ₹750 crore from investors, including HDFC Standard Life, Amansa Capital and General Atlantic. The transaction values the wealth arm at ₹14,622 crore compared with IIFL Holdings’ valuation of ₹22,721 crore. Shares of IIFL gained 2% to close at ₹712.20 on Wednesday.

Edited excerpts:

What is the growth outlook for your wealth business?

Growth outlook is fairly positive for our wealth business as India is growing and so is the wealth in the country. Many entrepreneurs are selling their businesses partly and they have a lot of wealth in their hand. There is lots of old wealth which was managed by family CAs or individuals without any external help which is now coming under professional management gradually. Therefore, the outlook for the wealth business is really good.


What is the progress on reorganisation and listing process for IIFL Group companies?

We have started the process of reorganisation under which IIFL Holdings shareholders will get shares of IIFL Wealth, IIFL Finance and IIFL Securities. So, IIFL Holdings will cease to exist and three companies will get independently listed. The process is already on the way. We are waiting for the regulators’ approval then we will go to NCLT and there are lot of other processes including shareholders approval, and then we have to go back to the regulators for the final approval. The whole process may take about 6-8 months depending on how quickly we get the approvals.

Do you think in order to really remain a big player in the mutual fund industry you need to go through the inorganic route?

Difficult to say. It’s true you need scale to be viable in mutual fund industry. Our strategy has been to focus on the alternative investment fund segment, a new category with minimum ticket size of ₹1 crore and therefore focusing on HNIs. We are leader with ₹20,000 crore of AUM in AIF. We shall grow mutual fund business as well and evaluate any opportunity for inorganic growth or strategic alliance as and when it comes. In the current market, valuation expectations have become unreasonable. We may therefore focus on getting quality talent and build the business organically.

You have been open to selling stake in the past. You have sold stake in IIFL to Fairfax. Are you open to more stake sales in other businesses?

We raise capital as and when there is need for funds. Since inception, promoters have never sold any stake but always diluted to get funds into the company. Currently, with this capital raise, we should not require any further dilution or stake sale for a couple of years.

Will 2018 also be strong in terms of flow like in 2017?

The year 2017 was a record year and 2018 began very well. The retail flow by way of SIP continues to be strong. If market is volatile, there may be intermittent slowdown. Still, flows will remain strong in 2018 as well.