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Kotak Top of The Pyramid 2014
Kotak Top of The Pyramid 2014
3
54
Drivers
Expectations
Preferences
INVESTMENT
Special Focus:
Private Equity
48
Sources of wealth
Decision makers
Investment approach
Asset allocation
4
Top of the Pyramid 2014 | Kotak Wealth Management
Iotalnetworthof
lndianultraHNls
hasincreasedto
` 104trillion
ighso!abuoyahIecohomyare
emergihgwiIhIhechahgeih
IheihvesImehIouIlookahd
advehIo!IhehewgoverhmehI.
1hecurrehIediIioho!1opo!
IhePyramidreporI!romKoIak
hascapIuredIhisposiIivesehIimehIas
!eaIuredihspehdsaswellasihvesImehIs.
ReadyforChangeisIhekeyIheme
sighi!yihgIheimprovemehIihIhe
overallsehIimehI.
1hehumbero!ulIraHighNeIworIh
Households(HNHs)ihIhdiahasgrowhby16%
Ihisyear,albeiIaIaslowerpacecomparedIo
IhelasIIhreeyears.1heIoIalheIworIho!
ulIraHNHshasalsoihcreasedIo` 104Irillioh,
re!ecIihg Ihis posiIive sehIimehI.
KoIakWealIhMahagemehI,IhePrivaIe
8ahkihgarmo!KoIakMahihdra8ahk
LimiIed,commissiohedLrhsI&YouhgLLP
(LY)ihdevelopihgIhereporI,collaboraIihg
wiIh Ihe markeI research !rm oh cusIomer
survey,sIudyahdahalysecusIomerIrehds
ahdprepareIhereporIwiIhihsighIs.LYused
parameIers such as CDP growIh, ih!aIioh
raIe, pasI ahd pro|ecIed !hahcial ahd hoh-
!hahcial asseI class allocaIiohs ahd reIurhs Io
deIermihepro|ecIiohs.
About the Report
1heemergehceo!hoh-meIrociIieshasalso
beehakeyIrehdasIheIierhowihcludes
~45%o!IhdiasulIraHNIs.IhIhelohg-Ierm,
Iheshareo!hoh-meIrosisexpecIedIo
ihcreasegradually.PrimaryresearchIhrough
ihIeracIiohwiIhluxurybrahdsahdsecohdary
researchihcludihgsaleo!luxurycarsahd
luxurygoodswasuIilisedIoarriveaIIhelisI
o!hoh-meIros.
UlIraHNIsbelieveIhaIIhewihdso!chahge
heraldsusIaihableahdrobusIecohomic
growIhoverIhehexI!ewyears.1hishasalso
chahgedIheirperspecIivewhehiIcomesIo
spehdsahdihvesImehIs.1hereislessresIraihI
ihdiscreIioharyspehdihg,parIicularlyihareas
suchasluxuryIravel.
IhourpreviousreporIs,wequizzedulIra
HNIsohIheirspehdihgahdihvesImehI
paIIerhsihIermso!Ihekeydriversahd
moIivaIiohs!orIhebehaviouramidsI
chahgihgecohomicehvirohmehI.
1hecurrehIreporIalsolooksaIspehdihg
ahdihvesImehIbehaviouro!ulIraHNIs.
1heihsighIshighlighIchahgesihspehdihg
behaviourihIhepasIyearaswell!uIure
spehdihgIrehds.1hereporIalsohasspecial
!ocusohLuxury1ravel,PhilahIhropyahd
S
5
UltraHNlshave
newaspirations
whichassign
apremium
toexclusivity
PrivaIeLquiIyIhvesImehIs.UlIraHNIshave
hewaspiraIiohswhichseekexclusiviIyihIheir
li!esIyles.ProducIahdservicesareevolvihgIo
meeIIhesehewaspiraIiohs.
1hecurrehIreporIisaculmihaIioho!ihsighIs
!romIhreemaihsources:
1.AdeIailedmarkeIsurveyo!150ulIraHNIs
byFeedbackCohsulIihgahdLY.
1hesurveyIookplacebeIweehFebruary2014
ahdApril2014,ahd!ace-Io-!aceihIerviews
werecohducIedihDelhi,KolkaIa,Mumbai,
8ehgaluru,Ahmedabad,Chehhai,Puhe,
Chahdigarh,LuckhowahdAurahgabad.
2.Aserieso!ihIerviewswiIhluxuryservice
providerssuchasluxuryIravelcompahies,
luxurywaIchcompahies,|ewellerycompahies
ahdWealIhMahagemehIRMs.
3.SecohdaryresearchahdaddiIiohal
ahalysisbyLY.
LYIhehuhderIookahexIehsiveahalysiso!
IhesurveyresulIs,ahdmahyo!iIscohclusiohs
werevalidaIedwiIhourprimarysources.
1hisreporIwouldhoIhavebeehpossible
wiIhouIIhecooperaIioho!allIhesurvey
respohdehIsahdIheihIerviewees.WeIhahk
Ihem!orIheirihvaluablesupporI,IheIime
IheypuIaIourdisposalahdIheihsighIs
Iheyo!!ered.
Coverso!previous1opo!IhePyramidreporIs
2013 2012 2011
6
Top of the Pyramid 2014 | Kotak Wealth Management
KoIaksevoluIiohisaIaleo!cohsisIehIpursuiI
o!opporIuhiIiesahdcapiIalisihgohIhem
despiIearapidlychahgihgecohomicahd
busihesslahdscape.AswereIraceoursIepsIo
IheihiIialdayso!our|ourhey,oheparIicular
daysIahdsouI21sINovember,1985.1his
was wheh Mr. Uday KoIak idehIi!ed ah
opporIuhiIyihIhebilldiscouhIihgmarkeI.
FromaseedcapiIalo!lessIhahUS$80,000
borrowed!rom!amilyahd!riehds,Mr.KoIak
aidedbyIheIeam,whichhasgrowh!rom
IhreeemployeesIoover26,000Ioday,adroiIly
led a bill-discouhIihg sIarIup ihIo a !hahcial
servicescohglomeraIewiIhasseIso!
US$19billioh.
IhFebruary2003,KoIakMahihdraFihahce
LId., our Croup's !agship compahy, became
Ihdia's !rsI Noh-8ahkihg Fihahce Compahy
Ioreceiveabahkihglicehse!romIheReserve
8ahko!Ihdia(R8I).
1huswaslaidIhe!ouhdaIioho!KoIak
Mahihdra8ahkLId.(KM8L).Weare!ocusihg
ourihdusIryexperiehceahdcapabiliIiesIo
caIerIochahgihgcusIomeraspiraIiohs.Our
soluIiohsareIechhologydriveh,cohIemporary
ahdcomprehehsive,spahhihgcohsumer
bahkihg,commercialbahkihg,corporaIe
bahkihg,wealIhmahagemehI,reIailahd
ihsIiIuIiohalequiIies,asseImahagemehI,li!e
ihsurahceahdihvesImehIbahkihg.
WehavecomealohgwaysihceIhoseearly
days. KoIak how caIers Io diverse !hahcial
heedso!ihdividualsahdIhecorporaIesecIor,
haIiohallyahdihIerhaIiohally.
KoIakWealIhMahagemehI,IhePrivaIe
8ahkihgarmo!KoIakMahihdra8ahkLId.,
provides !hahcial advice Io some o! Ihe
mosIdisIihguishedhighheIworIh!amilies
ihIhecouhIry.OurcliehIbaserahges!rom
ehIrepreheursIobusihess!amilies,aswell
asemployedpro!essiohals,ihcludihgover40
percehIo!IhdiasIop100!amilies(asperIhe
ForbesIhdiaRichLisI,2013).
WebelieveIhaIhosihgleasseIclassIehds
Ioper!ormcohsisIehIlyoveralohgperiod
o!IimeahdahHNIheedsIohaveaccessIo
variousasseIclasses,ihvesImehIsIyles,Ihemes
ahdIehures.WiIhIhisphilosophy,KoIak
About Kotak Wealth
Management
About Kotak Group
KotakWealth
Nanagement
rankedamong
theIop5Family
OfHces in Asia' by
EuromoneyPrivate
Banking5urveyin
2012,2013and2014
7
hasbuilIa!ormidablesuiIeo!producIsahd
services !or Ihis speci!c audiehce.
Ouro!!erihgsarecusIomised,basedohIhe
cliehI's pro!le ahd ihvesImehI ob|ecIives.
WiIhih-depIhuhdersIahdihgo!Ihe
cliehIsrequiremehIsahdIhevariousasseI
classes,KoIako!!ersIhewidesIrahgeo!
!hahcial soluIiohs.
We o!!er Family O!!ce Services Io ulIra
highheIworIhihvesIors,providihg
comprehehsive !hahcial soluIiohs which go
beyohdihvesImehIsIoprovideahosIo!
value-addedservices.
1hroughKoIakMahihdra1rusIeeshipServices
LimiIedweo!!erLsIaIePlahhihgServices
whichdealswiIhSuccessiohPlahhihgby
creaIioho!privaIe!amilyIrusIs.
KoIakWealIhMahagemehIisIheohlyIhdiah
WealIhMahagerIo!eaIureihIhe1op25
PrivaIe8ahkso!IheworldihIhecaIegory
o!8esIPrivaIe8ahkihgServicesOverallby
LuromoheyPrivaIe8ahkihgSurvey2013.
IIhasalso!eaIuredamohgIhe1op5Family
O!!ces ih Asia' by Luromohey PrivaIe 8ahkihg
Surveyih2012,2013ahd2014.
8
Top of the Pyramid 2014 | Kotak Wealth Management
lndiasultraHNH
populationhas
witnesseda
stronggrowthof
16%to117,000in
2013-14(E)
hereisasehseo!rehewed
opIimismihIheecohomy,which
haspickedupparIicularlyihIhe
secohdhal!o!2013,wiIhIhe
ihdicaIorsbeihgsIrohglyvisible
ihIhewesIerhecohomiesahd
Ihdiaaswell.IhdiasulIraHNHpopulaIioh
haswiIhessedasIrohggrowIh,risihgIo
117,000ih2013-14(LsIimaIed)!rom100,900
ih2012-13.
1heulIraHNIsseemIohavebrokehaway
!romIheirsehseo!cauIioushessahdarehow
spehdihgmoreIhahlasIyear.
DiscreIioharyahdhoh-discreIioharyspehds
haveriseh!rom30%o!IoIalihcome
allocaIiohIo45%Ihisyear.Coldahd
|ewellery,alsodoublihgupasihvesImehIs,
havebeehIhesihglelargesIareao!spehd,
!ollowedbyapparelahdaccessories,ahdIheh
byluxuryholidays.
1hepre!erehceo!ulIraHNIs!orluxuryIravel
hasbeehcoveredasaspecialIhemeihIhe
currehIpublicaIioh.Shoppihghasemergedas
IhemosIimporIahIIheme!orIravel.AhoIher
Executive Summary
emergihgIrehdisIheihcreasihghumbero!
shorIerIripsIakehbyIheulIra-rich,ihdicaIihg
aheedIoIake!requehIbreaks!romwork.
UlIraHNIsalsoaspire!orlarger-Ihah-li!e
Iravelexperiehces,wiIhmahysIaIihgihIeresIs
ihpolarexpediIiohsahdevehspaceIravel.
8esidesspehdihgohIhemselves,Iheyalso
believeihgivihgbackIoIhesocieIy.Nearly
Iwo-Ihirdso!ulIraHNIsihIerviewedaIIached
ahighsehseo!imporIahceIophilahIhropy,
wiIhPro!essiohalsbeihgIhemosIcohcerhed.
1heprimarymoIivaIorhereisIhesehse
o!saIis!acIiohderived!romcohIribuIihg
posiIivelyIosocieIy,wiIheducaIiohbeihg
T
Change is in the air, and this time it is for the better!
9
IhemosIcommohareao!philahIhropic
cohIribuIioh.
1heoverallposiIivesehIimehIhasbroughI
abouIachahgeihihvesImehIsaswell.8arrihg
wealIh!romprimarybusihess,realesIaIehas
beehIhebiggesIdrivero!ihcome,!ollowed
byequiIy.
Ourspecial!ocusohPrivaIeLquiIy(PL)
ihvesImehIsshowsIhaIulIraHNIsareacIively
ihvesIihgihIhePLspaceaswell.Nearly26%
o!ulIraHNIshaveahallocaIiohIoPLih
IheirIoIalihvesImehIs,wiIhhigherreIurhs
beihgIheprimarydriver!orIheihIeresI.
MuchihlihewiIhIhesecIorsshowihgrobusI
per!ormahce,ulIraHNIshavealsobeeh
ihvesIihg Iheir coh!dehce ih PL ihvesImehIs ih
I1,PharmaahdRealesIaIe.
Allihall,IherehasbeehaposiIivechahge
ihIheouIlooko!IheulIra-rich,ehcouraged
largelybyIheimprovedecohomy.1hisIrehd
isexpecIedIocohIihueahdevehacceleraIe
!urIher re!ecIihg a sIrohg sehse o! coh!dehce
ihIheresurgehceo!Iheecohomyihgeheral
ahdIheulIraHNIli!esIyleihparIicular.
Top of the Pyramid 2014 | Kotak Wealth Management
10
Ihelndianeconomy
hasseenanupturn
inthegrowthcycle
led by a stronger
Rupee,appointment
ofanewRBl
governorandan
industry-friendly
government
comingtopower
iveyears!ollowihgIheglobal
!hahcial crisis, Ihe world ecohomy
isshowihgsighso!lookihgup,
broughI!orIhbyarecovery
ihdevelopedecohomies.1he
improvihggrowIhsceharioih
developedcouhIriessighalsprogressacross
ecohomicsecIors,usherihgihahealihge!!ecI
posI Ihe !hahcial crisis.
LcohomicgrowIhihdevelopedcouhIries,
parIicularlyIheUSahdLurope,isexpecIedIo
boosI capiIal ih!ows ahd demahd !or exporIs
o!developihgcouhIries,IherebyacceleraIihg
IhegrowIhihIheecohomy.
1hisimprovemehIhasbuoyedIheoverall
growIhihwealIhglobally.WhileIherehas
beehasharpihcreaseihboIhIhehumber
o!globalbilliohairesahdIheirwealIh,iIis
evidehIIhaIIhegrowIhhasseehagreaIer
acceleraIiohIhisyear,whichcahbeaIIribuIed
IoIheimprovihgglobalecohomy.
IhIermso!ecohomicper!ormahce,whileIhe
globalmarkeIssawacyclicalrecoveryihIhe
secohdhal!o!2013,Ihiswasledbyarapid
expahsioh o! regiohal exporIs, re!ecIihg
agradualrecoveryihglobaldemahd.1he
siIuaIiohihIheIhdiahmarkeIsalsosaw
ahupIurh,parIicularlyihIhesecohdhal!
Ready for Change
THE INDIAN ULTRA HNI
o!Iheyear,wiIhmarkeIsehIimehIsbeihg
boosIedbyahumbero!!acIorsihcludihg
asIrohgerRupee,IheappoihImehIo!ahew
R8Igoverhorahd,mosIimporIahIly,Ihe
ihcreasihg coh!dehce due Io ah ihdusIry-
!riehdlygoverhmehIcomihgIopower.
1hereisIhusahihcreasihgopIimismIhaIIhe
ecohomywillimprove,wiIhIheWorld8ahk
pro|ecIihgahihcreasihgCDPgrowIho!over
6%!orIhehexIIhreeyears.
FromasecIor-wiseperspecIive,IheIhdiah
ecohomyhasseehaposiIivegrowIhihIhe
services secIor, ihcludihg !hahce, ihsurahce,
realesIaIeahdbusihessservices,while
mahu!acIurihg,mihihgahdquarryihghave
largelyshowhalacklusIreper!ormahce.
1
Similarly,ahulIraHNI!aho!LouisVuiIIoh
buysidehIicalLouisVuiIIohbags,oheo!
whichisusedasabag,whileIheoIheriscuI
Iodesighher!abricsIomaIchIhebag.
YeIahoIherulIraHNIweihIerviewedwas
moreIhaheagerIoshellouI`48lakhIoplay
gol!!oradayaIIheAugusIaCol!Course,
Ceorgia - cohsidered Io be ohe o! Ihe !hesI
gol!coursesihIheworld.
Areas of Spends
Ihisyearthe
percentageofultra
HNlsincreasing
theiryear-on-year
luxuryspendshas
been signiHcantly
higherthanthose
withareductionin
thesame
Ultra HNIs spend most on jewellery and apparel
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
24
Prefer Super Luxury Cars as a Status Symbol
Glocal is the New Wave when it comes to Cuisines
LuxurycarmakersareridihgIhewaveo!
ulIraHNIbuyerswhowahIIoahhouhce
IheirwealIhahdsuccess.UhdauhIedbyIhe
slowihgecohomy,IheluxurycarmarkeIhas
seehhealIhydemahdih2013-14,ehcouragihg
compahiesIoworkohhewlauhchplahsahd
!urIherexpahsioh.
LuxurycarshavecapIivaIedIheihIeresI
o!ulIraHNIswiIhIheirsmooIhride,plush
upholsIeryahdIheexclusiviIyIheyo!!er.
WhaIalsoaIIracIsIhemareIheicohicbrahd
ambassadors ih Ihe !elds o! sporIs ahd
ehIerIaihmehI,ahdIheexclusivecampaighs
Ihesebrahdsruh.AhemergihgIrehdisIhe
opIioho!SupercarClubsIhaIulIraHNIsare
parIicipaIihgih!ordrivihgawidevarieIy
UlIraHNIsIodayaremuchmoreawareo!
ihIerhaIiohalcuisihesdueIoIheirexIehsive
IravelsahdihcreasihglyadvehIuroushaIure.
1heIimesIodayarewiIhessihguseo!
ihIerhaIiohalihgrediehIsihIhdiahdishesahd
viceversaihboIhcases,Ihee!!orIishelpihg
ulIraHNIsIryouIhewercuisihes.
MoreihIeresIihgly,IhegasIrohomicsceheih
IhdiaisuhdergoihgamakeoverwiIhscores
o!che!sreIurhihg!romLohdoh,1okyo,New
YorkahdelsewherebrihgihghewexperIise
o!exoIicmodelsaIa!racIioho!IhecosI,
wiIhouIhavihgIoworryabouIowhershipahd
maihIehahce.
AccordihgIoIhepresidehIo!asuperluxury
brahdihIhdia,cusIomersihIhdiaareoheo!
IheyouhgesIihIheglobalmarkeIsmuch
youhgerIhahIhoseihLurope.
However,Ihehighlyprice-sehsiIiveulIraHNIs
haveIakehamiddlespoIihluxurycars!or
useihIhdia,raIherIhahgiveihIoIhehighesI
ehdo!IhaIsegmehI.AhulIraHNIwillihg
Iosplurgeohasupercarwould,ihmahy
cases,haveahouseabroadallowihghimIo
owhIhesamemodelaIareducedcosIwhile
eh|oyihgbeIIerroadsahdih!rasIrucIure.
ahdihvehIioh.NoIsurprisihgly,someo!
IhemosIexpehsivedishesavailableihIhdia
revolve arouhd premium cuIs o! meaI !owh
ih!rom1apah,AusIraliaahdIheUS,hoIIo
mehIioh imporIs o! blue!h oIoro sashimi or
alba whiIe Iru!!es.
While ihIerhaIiohal pro!ciehcy is growihg ih
Ihdia,ClocalissIeadilybecomihgIhehew
wave!orulIraHNIcuisihes,boosIedbyIhe
hewergeheraIiohreadyIoexperimehIih
order Io !hd hewer ahd !her !avours. Ih !acI,
A German
automobile giant
sold125unitsofits
recentlylaunched
top-of-the-line
luxurycarpricedat
`1.57crorein
just16days
Spends
25
youhgihheriIorswere!ouhdIobeIhemosI
experimehIalwiIhhewagecuisihessuchas
1apahese,SpahishahdMexicah.
ResIaurahIsIodayarealsoIryihgIoposiIioh
IhemselvesuhiquelyIocreaIeadi!!erehIial
experiehce!orsuperluxurydihihg.For
example,aluxuryhoIelihDelhiIakespride
ih Ihe !acI IhaI Ihe !sh served is caughI Ihe
old-!ashiohedway,Ihroughhookahdlihe,
ahd a leadihg !ve-sIar hoIel ih Mumbai
o!!ersdihihgihasecludedprivaIeambiehce
overlookihgIhesea-IhedelighIo!waIchihg
ache!preparihga1eppahyakimealahd
dishesihcludihgIehderloihimporIed!rom
NewZealahd,amohgoIhers.
WhileulIraHNIshavebeehadvehIurousih
IryihgouIhewcuisihes,weaskedIhemabouI
Iheir!avouriIecuisihesChiheseseemedIo
beIhemosIpre!erred,!ollowedbyIIaliah
ahdIhdiah.
However,someulIraHNIsarewaryo!
spehdihgohexoIic!ood.LasIyear,whilea
weakrupeea!!ecIedsuperluxurydihihg,
whichislargelybasedohimporIed!ood,
ulIraHNIswerewillihgIoreduceIheirspehds
ohluxurydihihg,showihgahihclihaIiohIo
ihdulgemoreihareaswhichareIahgibleahd
cahbedisplayedIopeers.
However,IhescehariohaschahgedIhis
yearwiIhulIraHNIseh|oyihgIheluxuryo!
ihIerhaIiohalcuisiheresIaurahIs.
Cuisines Chinese and Italian
are the Favourites
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
26
Love to Gift Luxury Watches and Jewellery
UlIraHNIsloveIospehdohIheir!riehdsahd
relaIivesIhroughgi!Is.OursurveyresulIs
showahihclihaIiohIowardsluxurywaIches,
!ollowedby|ewelleryahdaccessories,while
mobilephohescohIihueIoihcreasihgly
!eaIureihIhelisI.1houghulIraHNIspre!er
IobuyluxurywaIches!orIhemselves!rom
abroad,IheyarequiIewillihgIobuyaRolex
oraHubloIihIhdiaasagi!I!ora!riehd
orrelaIive.
1heulIra-richgobeyohd!ormaloccasiohs
Iobuygi!Is.1heyalsoloveIoihdulgeih
apologygi!Isahd!ahcyihviIes.
Forexample,Ihewi!eo!aDelhi-basedulIra
HNIcameupwiIhahovelideaIoexpressher
regreI!orhoIbeihgableIoaIIehdahigh
pro!le weddihg. She imporIed Ihree 8irkih
hahdbagsIobesehIIoIhebrides!amilyasa
hoIeo!apology.
Similarly,aNoida-basedrealesIaIeIycooh
ordered60RolexwaIchesIobesehIouIwiIh
ihviIaIiohcards!orhisdaughIersweddihg.
Gifting Patterns
Watches and jewellery are the preferred gifting items
An Entrepreneur
giftedhigh-end
luxury mobile
phonestohisentire
teamtoshowhis
appreciationforthe
successofaproject
*Ci!Ishavebeehscoredohascaleo!1Io6,wiIh6beihgmosIpre!erred
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Spends
27
Younger, Self-made Ultra HNIs More Inclined to Celebrating
Personal Occasions and Success
UlIraHNIs,especiallyyouhgLhIrepreheurs,
showmoreihIeresIihcreaIihgah
uh!orgeIIableexperiehceIocelebraIeIheir
successorIoesIablishIheiridehIiIy.For
example,aDelhi-basedulIraHNIrecehIly
bookedaIripIoIheNorIhPoleIocelebraIe
his!orIieIhbirIhday.
AhoIherulIraHNIspehIover` 30lakhIo
gi!I a !ve-day Irip Io his moIher oh her
birIhday.UlIraHNIsalsoropeihmoviesIars
or ih!uehIial poliIiciahs !or large !amily
!uhcIiohssuchasweddihgs.
AhihIeresIihgdevelopmehIihrecehIIimes
is !ve-sIar hoIels caIerihg aI ulIra HNI homes
!orspecialevehIsahdoccasiohs.Ih!acI,
havihgIhebesIche!so!IheciIycomeahd
cookaIIheevehIbecomesahaIIracIiohih
iIsel!.Someo!IhebesIhoIelshavesIarIed
uhderIakihgouIdoorcaIerihg,ihcludihgIop
luxuryhospiIaliIybrahds.
IIisalsomorecommoh!orulIraHNIsIo
celebraIepersohaloccasiohsmoreIhah
pro!essiohalsuccess.However,!orbusihess
!uhcIiohssuchascelebraIihgpro!essiohal
successahdorgahisihglauhchparIies!orhew
producIs,oursurveyrevealedLhIrepreheurs
IobeIhemosIproacIive,owihgIoIhesehse
o!aIIachmehIIoIheirbusihess.
Types of Events Organised
1hisyearhasalsoseehariseihIhe
deploymehIo!evehImahagersIoorgahise
evehIs.Useo!evehImahagershasbeeh
highesI!orcelebraIihgbirIhdaysahd
ahhiversaries,wiIh45%ahd25%o!ulIra
HNIsopIihg!oriI,showihgIheirgrowihg
imporIahcealohgwiIhIheireagerhessIo
spehdmoreohcelebraIihgpersohalevehIs.
Professionals
preferconducting
eventsathome;
Entrepreneursgo
infordestination
events
Ultra HNIs prefer to celebrate birthdays and anniversaries
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
28
LvehIhoughulIraHNIshavespehdihgpaIIerhsahdhabiIs
!ardi!!erehI!romIhaIo!Ihecommohmah,iIisihIeresIihg
IosIudyIheiraspiraIiohs.
WeaskedIheulIraHNIsihoursurveyabouIIheir
aspiraIiohsahd!ouhdarahgeo!diverseahswerscapIurihg
Ihedreamso!IherichesI.NoIsurprisihgly,mosIo!Ihese
aspiraIiohswerecehIredohowhihgasuperluxurycarora
villaihahexoIiclocaIioh.
28
Top of the Pyramid 2014 | Kotak Wealth Management
Aspirations
Spends
29
Spends
29
Top of the Pyramid 2014 | Kotak Wealth Management
30
Top of the Pyramid 2014 | Kotak Wealth Management
30
Top of the Pyramid 2014 | Kotak Wealth Management
Spends
31
Luxury Travel
Special Focus
T
he average Ihdiah's percepIioh o! Iravel has chahged sighi!cahIly
overIhelasIcoupleo!decades.AliberaIedecohomywiIheasierIrade
relaIiohswas|usIIhebegihhihg,buIIhedoorsIhaIopehedIherea!Ier
ihcreasedIhegeheralawarehesso!IheIhdiahIraveller.Nowohder
IhehIhaIdivihgwiIhsharksihSouIhA!ricaorglacierIreksih
NewZealahdorF|ordcruisesihScahdihaviaarecommohIopicso!discussioh
amohgaspirihgIravellersIoday.
As!orIheulIraHNIs,luxuryIravelheedsIoprovideawelcomebreakor
beIIersIill,usherihasehseo!exclusiviIy.1hus,whileulIraHNIsloveIovisiIIhe
megamallso!DubaiahdSihgapore,ohIheoIherhahdIheyarealsokeehoh
vacaIiohihgihIheexoIicMediIerraheahorIheazureCaribbeah.Somehaveeveh
grahderIravelaspiraIiohs,suchasgoihgihIospace.
Top of the Pyramid 2014 | Kotak Wealth Management
32
UlIraHNIsarepassiohaIeabouIIravellihg,
wiIhluxuryIravelbeihgoheo!Iheirkey
spehdareas.8asedohoursurvey,hearly50%
o!allulIraHNIsmakeaIleasIIhreeluxury
Iripsihayear.IhIermso!IhesegmehIs,a
greaIerpercehIageo!IhheriIorsmadeaI
leasI !ve Irips ahhually, owihg Io a greaIer
availabiliIyo!Iime.
AhemergihgIrehdhasbeehIhedecliheih
Iheaveragehumbero!daysperIrip,wiIh
acorrespohdihgihcreaseihIhehumbero!
Nearly 50% of Ultra HNIs make Three Luxury Trips in a Year
Number of Luxury Trips in a Year
IripsulIraHNIsarepre!errihgIoIravelmore
!requehIlywhilereducihglohgIrips.1hereisah
ihcreasihgihIeresIihshorIweekehdIrips.
UlIraHNIsspehdaIleasI` 1.2lakhper
coupleperhighIohahaverage,accordihg
Ioaleadihgluxuryserviceprovider.WiIhih
IheulIraHNIsegmehI,LhIrepreheursahd
IhheriIorsIehdIoihcurhigherspehds!orIheir
luxuryIravelIhahPro!essiohals.1hisisihlihe
wiIhIhelaIIersIehdehcyIoallocaIemore
ihcomeIosavihgsahdihvesImehIs.
UltraHNlsare
willingtospend
largesumsof
moneyaslongas
theyperceivevalue
intheexclusivityof
theluxurytravel
Ultra HNIs travel frequently but reduce the duration of trips
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Spends
33
Spend in Last 12 Months on Travel
LuxuryIravelIodayhasalsobecomeadisplay
o!IheeclecIicIasIeso!ulIraHNIs,wiIh
ahihcreasihgpre!erehceIoIravelexoIic
ahduhexploreddesIihaIiohs.1hisismore
prohouhced!oryouhgerulIraHNIsahdIhe
houveauriche,whopre!erIodisplayahdIalk
o!IheirIasIes,asagaihsIIheoldergeheraIioh
whichpre!ersamorediscreeIli!esIyle.
WhileluxuryIravelihIhepasIyearwas
parIicularlya!!ecIeddueIoIheperceived
cauIiohihIheecohomy,Iravelplahs!or
ulIraHNIsarealreadyseeihgahupswihg,
parIicularlyihIhesecohdhal!o!Iheyear.
1hisreih!orcesIhe!acIIhaIulIraHNIswahI
IocuIdowhohihIahgibleexpehdiIure
comparedIoIhemoreIahgibleohes.
UltraHNlsresearch
extensivelyontheir
owntosatiatetheir
tastesandensure
valueformoneyin
theirspends
Ultra HNIs spend large sums if they perceive value in the exclusivity of the luxury travel
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
34
While69%o!LhIrepreheursahd63%o!
Pro!essiohalspre!erredbusihessclassIravel
!orwork,IhepercehIagesshoIupbymore
Ihah20%eachwhehiIcameIoIravellihg
!orleisure.
1ocaIerIoIheulIraHNIsIasIe!orluxury,
IravelorgahisersarecomihgupwiIhuhique
ideasaswell.Forexample,ahaircarrier
!romIheMiddleLasIiso!!erihgsuperluxury
Iravel,creaIihgIheclosesIexperiehceIo
IravellihgohaprivaIe|eIihcommercial
airlihesIhisihcludesIraveliha125sq.!I.
3-roomcabih,wiIhalivihgroom,adouble
bedroom,eh-suiIeshowerroomahda
persohalbuIler,alohgwiIhahosIo!luxury
!eaIures.1hiscosIs` 12lakh!romAbuDhabi
IoLohdoh,arouIeo!IehIakehbyIheIhdiah
ulIra-richaswell.
lndia vs. Abroad
UlIraHNIsshowedslighIlyhigherihIeresI
ihIravellihgwiIhihIhdiavs.abroadwheh
askedhowmahyluxuryIripsIheywould
pre!erihIhdia,IheaveragevaluesIoodaI
IhreeasagaihsIIwoabroad.
1hishighlighIsIhaIulIraHNIsarekeehoh
IourihgIhdiaaswellIhemosIpopular
domesIicdesIihaIiohsbeihgLadakh,
Ra|asIhahahdKerala.Pro!essiohalsshowed
!arhigherihIeresIihdomesIicIravel
comparedIoIheresI.
Travel Preference: Business vs. Economy
Entrepreneurs, Professionals Travel Business Class for Leisure
WhileIhheriIorsmoreorlessdisplayeda
uhi!ormIrehdbusihessvs.ecohomyIravel
!orworkahdleisurealike,alargesecIioho!
LhIrepreheursahdPro!essiohalspre!erred
ecohomyIravel!orwork,buIswiIchedIo
luxurybusihessclass!orleisure.
Ultra HNIs travel Business class for leisure trips with family
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Spends
35
Factors Considered
in Luxury Travel
Ultra HNIs Travel Predominantly to New Exclusive Places
LasIerhLuropeisemergihgasapopular
desIihaIioh!orexoIicIravelwhilesIaysih
ahciehIcasIlesahdluxuryvillasihIrelahd,
SwiIzerlahdahdCreecearealsogaihihg
populariIyamohgIheulIra-rich.
CelebraIioho!occasiohs,predomihahIly
ahhiversaries, also !gured highly as !acIors
promoIihgIravel.1heIhirdmosIimporIahI
!eaIurewasIhe!eelihgo!exclusiviIy
experiehcedbyIravelIoo!!-beaIexoIic
locaIiohsahdsuperluxuryresorIs.
1ocaIerIoIheserequiremehIs,hicheluxury
serviceprovidersarecomihgupwiIhvibrahI
holidayideas,ihcludihgexperiehcessuchas
uhderwaIerexpediIiohs,IravelalohgIhe
IIaliahcoasIliheorahAhIarcIicodyssey,
amohgoIhers.
1heulIra-richdohoIhesiIaIeIospehdoh
luxuryIraveli!ahideacaIchesIheiraIIehIioh.
Forexample,lasIyear,aMumbai-based
busihessmah, oh !hdihg his !amily members
keehly!ollowihgIheWimbledohIourhamehI,
arrahged!orIheirIravelIoIheshriheo!
Iehhisih|usIIhreedaysIime,spehdihg
` 50lakh!orIhesame.Similarly,ahoIher
Mumbai-based ulIra HNI !ew his daughIer oh
aprivaIe|eIIoher!avouriIeresIaurahIihCoa
|usIbecauseshewahIedIohaveaspecial
luhchohherbirIhday.
WhehiIcomesIodrivers!orIravel,seekihga
breakisIheprimarymoIivaIor!ollowed
bypassioh!orIravel. Source:1opo!IhePyramid2014,
KoIakWealIhMahagemehI
A Numbai-based
businessman, upon
Hnding members
ofhisfamily
keenlyfollowing
the Wimbledon
tournament,
arrangedfortheir
traveltotheshrine
oftennisinjust
threedaystime,at
acostof`50lakh
Location is the most important
attribute in luxury travel
Top of the Pyramid 2014 | Kotak Wealth Management
36
Drivers for Luxury Travel
EasternEurope
isemergingasa
populardestination
forexotictravel
whilestaysin
ancientcastlesand
luxuryvillasin
lreland,5witzerland
and Greece are also
gainingpopularity
amongtheultra-rich
Taking a break is the primary motivator, followed by passion for travel
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Spends
37
Vacation Theme Preferences
Shopping Emerges as an Important Theme for Travel
Sihgapore,DubaiahdIheLuropeah!ashioh
capiIalshaveemergedasIhemosIpre!erred
IraveldesIihaIiohs.UlIraHNIspre!ershoppihg
hubsIoihdulgeihIheirchoicesIbrahds
whilemahyo!IhesereIailbrahdshaveseI
shopihIhdia,ulIraHNIs!eelIhaIIhereis
sIillaperceivabledi!!erehceihqualiIy.For
example,aparIherihaleadihgcohsulIihg
!rm Iravels Io Lohdoh every quarIer Io shop
!orcloIhesdueIoIhesheervarieIyavailable.
OIher!acIorsIhaIspurIheseshoppihg
IripsihcludeacquirihgIhelaIesIo!!erihgs
o!!ashiohhousesorgeIIihgbeIIerprices
comparedIoIhoseaIIhdiahouIleIs.
Shoppihgwas!ollowedbybeachesasIhe
mosIpre!erredIheme.1hebeacheso!
Asia-OceahiaihcludihgMaldives,Fi|iahd
FrehchPolyhesia,wereIhemosIpre!erred
desIihaIiohs,!ollowedbyIheMediIerraheah,
IheFrehchRiviera,IheCaribbeahahdHawaii.
8eacheswereclosely!ollowedbyhills
ahdmouhIaihs,ahdwhileIheAlpswere
asIrohg!avouriIe,iIwasihIeresIihg
Io hoIe a sighi!cahI percehIage o!
respohdehIsIravellihgalohgIheHimalayas
aswellihNepalahd8huIahouIsideIhdia.
UltraHNlsarealso
eagertotravelto
meettheirfavourite
starsordropinat
covetedevents
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
38
UlIraHNIs,besidesIryihgIheIesIed,arealso
advehIurousihIheirideas.1husIheyarealso
ihIeresIedihexplorihgIheMaya/AzIecIrails
ihCuaIemala,IrekkihgupIoIheAhgelFalls
o!VehezuelaorevehdivihgihIhebluewaIers
o!8elizeihCehIralAmerica.
OhceIhecohvehIiohalLuropeahdesIihaIiohs
o!ParisahdLohdohareIickedo!!,LasIerh
LuropeisemergihgasahewdesIihaIioh!or
ulIraHNIs,ihcludihg8alIichaIiohslikeLaIvia
orcouhIriessuchasCroaIiaahdMohIehegro.
LuropewasIhemosIpre!erreddesIihaIioh
!ollowedbyAsiaahdNorIhAmerica.
UlIraHNIsarealsoeagerIoIravelIomeeI
Iheir!avouriIesIarsordropihaIcoveIed
evehIsprivaIemeeIihgswiIhsporIs
persohaliIiesahdHollywoodsupersIarswere
someexampleso!luxuryIripsIhaIulIraHNIs
uhderIooklasIyear.
Most Popular Ultra HNI Destinations
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Europe is the most preferred destination for ultra HNIs
Spends
39
WhileIheulIraHNIsarealreadyexIehsiveglobeIroIIers,
weaskedIhemabouIIhedesIihaIiohIhaIIopsIheir
musI-visiIlisI.
IhIeresIihgly,alargehumbero!respohdehIsshoweda
keehihIeresIihspaceIravelorIravelIoIheMooh.1here
was a sighi!cahI ihIeresI ih polar expediIiohs as well.
Visit to Musha
Cay, Bahamas
Polar expedition
Space travel
Lamborghini drive along the US coast
Follow the
Northern lights
Aspirations
39
Spends
Top of the Pyramid 2014 | Kotak Wealth Management
40 40
Top of the Pyramid 2014 | Kotak Wealth Management
Spends
41
U
lIraHNIsareaskeehohdohaIihgmohey!oraworIhycauseasIhey
areihearhihgiI.CivehIheIrahsiIiohIoIheageo!ihspiraIioh,
wheheverybodyaspiresIobekhowhasarolemodel,Ihedoihg
good!orsocieIyaspecIbecomesimporIahI.1heulIra-richare
aIIhe!ore!rohI,leadihgIhechahgewiIhIheirihvolvemehIih
philahIhropicacIiviIiesahdchariIy!orvariouscauses.
Clobally,ulIraHNIsareadopIihgihIeresIihgapproachesIhaIhaveIhepoIehIialIo
caIalyzelarge-scalesocialimpacIohavarieIyo!criIicalissues.Closerhome,some
o!IhemosIrehowhedbusihesspersohaliIieshavedohaIedalargeparIo!Iheir
ihcomeIowardsvariouscausesahdchariIies.
1he!ollowihgsecIiohlooksihIoIhephilahIhropicihIeresIso!ulIraHNIs,Ihe
causesIheysupporIahd,moreimporIahIly,IhemoIivaIihg!acIorsIhaIdriveIhem
IowardschariIy.
Philanthropy
Special Focus
Top of the Pyramid 2014 | Kotak Wealth Management
42
Asmahyas65%o!IheulIraHNIsihIerviewed
!elIiIisimporIahIahdhecessaryIogive
backIosocieIyihIhe!ormo!achariIable
acIiviIy.AmohgIheulIraHNIsegmehIs,
Pro!essiohalsshowedIhehighesIihIeresI,
wiIh75%cohsiderihgphilahIhropyIobea
veryimporIahIacIiviIy.
1hecommiImehIIowardsphilahIhropyis
!urIherihdicaIedbyIhepre-plahhedspehds
Professionals Show a Higher Interest in Philanthropy
Importance of Philanthropy
ohchariIyasparIo!Iheoverallahhual
spehds.Over60%o!IheulIraHNIswe
surveyedcohsiderphilahIhropicacIiviIies
whileplahhihgIheirahhualexpehdiIure.
However,whiledohaIiohs!orchariIymay
bepre-plahhed,Ihesearelargelymadeih
ahadhocmahherIhroughIheyear,asIhe
supporIihgcause!orchariIyremaihslargely
uhcerIaih.
Over60%ofthe
ultraHNlssurveyed
considered
philanthropic
activitieswhile
planningtheir
annualexpenditure
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Ultra HNIs attach a high level of importance to philanthropic activities,
with 75% of Professionals stating it to be very important
Spends
43
SelecIulIraHNIsaIIribuIedIhisIoIhe
uhder-developeddeliveryih!rasIrucIure
o!NCOsahdIrusIs,leadihgIoasehse
o!uhcerIaihIyihIheehd-useo!Iheir
cohIribuIiohs.NoheIheless,IhheriIorswere
IhemosI!ocusedihplahhihghowahdwhere
IodohaIe,!ollowedbyLhIrepreheursahd
IhehPro!essiohals.
Planned Expenditure on Philanthropic Activities
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
1hegrowIho!philahIhropicspehdsihIhdia
hashoIbeehproporIiohalIooverallgrowIh
ihulIraHNIwealIh.MahyulIraHNIshave
acquiredIheirwealIhrecehIlyahdareih
Iheprocesso!cohsolidaIihgiIbe!orebeihg
ableIocohIribuIeIosocieIy.1hisis!urIher
hihderedbyIheuhdevelopedih!rasIrucIure
ahdopaqueoperaIiohso!mahyNCOs.
63% of ultra HNIs include philanthropic spends in their annual expenditure plan
Top of the Pyramid 2014 | Kotak Wealth Management
44
aKolkaIa-basedehIrepreheurrecollecIshis
childhooddaysihrural8ehgalwhehhehad
Iowalk!ormilesIoreachIhehearesIprimary
school. 1oday, he is cohIribuIihg sighi!cahIly
everyyearIoseIupschoolsihIhemosI
backward disIricIs, !eelihg saIis!ed aI his
e!!orIsihcreaIihgabeIIersocieIy.
WhehulIraHNIsprovidemoheIarysupporI
IoNCOs,IheywahIIokhowmoreabouI
Ihe orgahisaIioh, Ihe behe!ciaries ahd,
moreimporIahIly,howmucho!Iheirmohey
PhilahIhropicacIiviIieshavebeehdrivehby
mulIiplereasohs,depehdihgohIhecaIegory
o!ulIraHNIsaswellasIhedemographic
pro!le. 8ased oh our survey, Ihe key moIivaIor
IhaIdrivesphilahIhropyisa!eel-good!acIor
ihbeihgableIocreaIeabeIIersocieIy.
MahyulIraHNIs,especiallyLhIrepreheurs,
havebuilIIheir!orIuhesoverIime.QuiIe
a!ewo!IhemhaveseehihcidehIsihIheir
!ormaIiveyearswhichihspireIhemIodayih
IheirphilahIhropicacIiviIies.Forexample,
Feel-good Factor Drives Charity
Factors Driving Ultra HNI Philanthropy
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
A feeling of satisfaction motivates ultra HNIs to donate
Spends
45
Mode of Involvement in Philanthropic Activities
reaches Ihe behe!ciaries. Due Io lack o!
IimeIodoaIhoroughevaluaIioho!Ihe
NCOs,Iheypre!erIosupporIesIablished
orgahisaIiohsIhaIpromoIechildeducaIioh
ahdhealIh.
CivehIhaIIheulIraHNIsremaihihvolvedih
Iheirwork,alargeproporIiohdohaIesmohey
direcIly.However,ahihcreasihghumber
o!ulIraHNIs,especiallyLhIrepreheursahd
Pro!essiohals,areshowihgahigherpersohal
ihvolvemehIihIheirphilahIhropicacIiviIies.
1hishoIohlyhelpsIhemIomohiIorIhe
ouIcomesahdchahhelIheircohIribuIiohs
beIIer,buIalsodirecIsIheihvolvemehI
!urIherahdaddsIoIheirsaIis!acIioh.Asa
A Kolkata-based
entrepreneurhadtowalkfor
milestoreachthenearest
primaryschool.Iodayheis
helpingsetupschoolsinthe
most backward districts of
WestBengal
Entrepreneurs and Professionals show higher personal involvement
Delhi-basedPro!essiohalmehIiohed,direcI
ihvolvemehIhelpsulIraHNIsIoihspire
peers,!riehdsahdrelaIivesIorecoghiseIhe
supporIihgcauseahdalsoehcouragesIhemIo
cohIribuIeihIurh.
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
46
Scepticism of Existing Infrastructure makes
Ultra HNIs Establish their Own Foundations
Most Preferred Vehicles for Philanthropy
UlIraHNIsuseNCOsahdIrusIsascommoh
plaI!ormsIocohIribuIeIochariIy.However,
mosIulIraHNIsarescepIicalo!IheseexisIihg
plaI!ormsasIhereiso!Iehalacko!clariIyoh
Ihe !hal uIilisaIioh o! Ihe cohIribuIiohs made.
AccordihgIoa!ewrespohdehIs,NCOsahd
IrusIscahheavilyimproveupohIheiroverall
meIhodologyo!uIilisihg!uhdsIoboosI
dohor coh!dehce. 1hey, however, !eel IhaI
Ihesceharioisalreadyshowihgsighso!
improvemehI,alIhoughaIaslowpace.
NoheIheless,IheexisIihgih!rasIrucIureis
leadihgIheulIra-richIoesIablishIheirowh
chariIy!ouhdaIiohsIhaIcahhoIohlydirecI
mohey Io speci!ed causes buI cah also be
mohiIorede!!ecIively.Ih!acI,mahyo!Ihe
ulIra-richarealsocohsiderihg|oihihghahds
IoihcreaseIhecorpusahdehhahcecredibiliIy
o!Ihesame!or!uIure!uhdraisihgacIiviIies.
WhileulIraHNIssupporIadiversehumber
o!causesacrossage,gehderahdheed,
educaIiohhasemergedasIhemosIimporIahI
causeo!supporI.Ohe!acIor,respohdehIssay,
has beeh Ihe ih!uehce o! some leadihg Ihdiah
busihess!amilieswhohaveseIupschoolsahd
researchihsIiIuIiohsacrossIhdia.
1hisisihspirihgulIraHNIs,especiallyIhe
houveauriche,IoalsopromoIeeducaIioh,
parIicularlyihruralIhdia.
An NRl has
allocatedmore
than20%ofhis
annualincome
to build a model
village in Andhra
Pradesh,which
includesschools,
primaryhealthcare,
atechnical
traininginstitute
forwomenand
communitycentre
Trusts and NGOs are the most preferred vehicles for philanthropy
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Spends
47
Causes Supported in Philanthropic Activities
Ultra HNIs support a number of causes, education being the strongest
UltraHNlsrecognise
government-run
schoolsinremote
locationsandhelp
inimprovingthe
infrastructure by
providing books
ormeals
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
48 48
Top of the Pyramid 2014 | Kotak Wealth Management
Investment
49
INVEST
How the Ultra HNIs
49
heihvesImehIpaIIerhso!ulIraHNIshavealwaysbeeh
aguidihgahdihspiraIiohal!orce!orIheoverallmarkeI.
1heyhaveIrahs!ormedIhemselvesahdIakeprideih
beihgopihiohleadersahdIheirihpuIscarryaloIo!
weighIihIhisparIo!Iheworld.1hemarkeIcuriosiIy
ohIheihvesImehIsbeihgmadebyIhesavvyihvesIorso!Ihdiaisa
IalkihgexampleohIhis.1hechoiceo!asseIclassesbyIheseulIra
HNIsalsogivesapulseo!IheecohomicclimaIeo!IhecouhIry.
UlIraHNIshaveasIrohgpre!erehce!orihvesIihgihIoequiIy
ahdrealesIaIe.1heirrealesIaIeihvesImehIdecisiohsare
wide-rahged, !rom lohg-Ierm ihvesImehIs Io !hdihg a suiIable
reIiremehIhomeIoexplorihgihIeresIsihagriculIure.RealesIaIe
isalsoseeihgihIeresI!romulIraHNIsihIheareaso!commercial
realesIaIeahdluxuryrealesIaIe.
1hecurrehIsecIiohlooksihIoIheihvesImehIpaIIerhso!
ulIraHNIs,Iheirchoiceo!asseIsahdasseIclassesahdIheir
approachIoihvesImehI.
Investment
T
Top of the Pyramid 2014 | Kotak Wealth Management
50
RealesIaIehasalwaysbeeha!avoured
ihvesImehI!orulIraHNIs.1heIahgiblehaIure
ahdhosIo!opporIuhiIiesassociaIedwiIh
realesIaIeihIermso!saleahdrehIaliswhaI
aIIracIspeopleIoIhisasseIclass.LxcepI!or
Ihe blip durihg Ihe !hahcial crisis o! 2008, real
esIaIehasgeheraIedwealIh!orulIraHNIs
overIhelasI!ewyears.
1wo-Ihirdso!IheIoIaldisIribuIioho!
wealIh!orulIraHNIscomes!romprimary
busihessahdrealesIaIe.AmohgulIra
HNIs,Pro!essiohalslayhigheremphasisoh
premiumrealesIaIe,whilsILhIrepreheurs
ahdIhheriIorslayhigheremphasisohIheir
primarybusihess.
DespiIeIhegeheralpercepIiohIhaIulIraHNIs
areproheIoIakihgrisks,Iheyaregeherally
risk-averseahdIhisaversiohIoriskihcreases
wiIhIheirwealIh.
Primary Business, Real Estate Key Sources of Wealth
Sources of Wealth
Real estate and success in
primary business are the
key sources of wealth
Real estate, being
atriedandtested
investmentoption,
isnotlikelytoloseits
sheenanytimein
thenearfuture
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Investment
51
UlIraHNIshavedisIihcIsIyleso!ihvesIihg
ahddecisiohmakihg.LhIrepreheursIehd
IobemorespeculaIiveihIheirihvesImehI
approach re!ecIihg Iheir operaIihg sIyles. 1he
sIyleso!ihvesIihgbecomemoredisciplihed
aswemove!romLhIrepreheursIoIhheriIors
ahdPro!essiohals.Pro!essiohals,beihgmore
risk-averseahddisciplihed,believeihearhihg
wealIhwiIhasysIemaIicplah.
1hecomplexiIyo!decisiohmakihgishahdled
geherallybyIheulIraHNIsIhemselvesih
Entrepreneurs Speculative; Professionals Disciplined Investors
Decision Makers in Ultra HNI Investments
Entrepreneurs and Inheritors rely more on family & friends for investment decisions
coordihaIiohwiIhIheiradvisors,rahgihg!rom
!amilyahd!riehdsIoexperIs.
Pro!essiohalsrelyohsel!-ahalysis!or
ihvesImehIdecisiohmakihg.LhIrepreheurs
ahdIhheriIorsIehdIocohsulI!amilyahd
!riehdsmoreIhahPro!essiohalswhehmakihg
decisiohsregardihgihvesImehIs.Oursurvey
resulIsshowIhaI28%o!IhheriIorsahd19%
o!LhIrepreheursrelyoh!amilyahd!riehds
ascomparedIo13%o!Pro!essiohalsihIheir
ihvesImehIdecisiohs.
UltraHNlsare
diversifying
portfolios
geographically.Ihis
givesthemachance
toinvestinareas,
ideasandthemes
not available in
domesticmarkets
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Top of the Pyramid 2014 | Kotak Wealth Management
52
Approach Towards Investments
IhahIicipaIioho!IhehewgoverhmehI,Ihe
equiIymarkeIshaveseehasharpihcrease
wiIhIhe8SLSehsexdeliverihg~30%reIurhs
ihIhelasI12mohIhs.1hishasbeehpropelled
by ihcrease ih capiIal ih!ows !rom domesIic
ahd!oreighihvesIors.MirrorihgIhisoverall
posiIivesehIimehI,ulIraHNIshavealsoIakeh
Equity, Real Estate are Primary Investment Classes,
Debt Exposure has Reduced
alikihg!orIheequiIymarkeIahdihcreased
IheirexposureihahIicipaIioho!asIrohger
domesIicecohomy.
OursurveyrevealsIhaIIheallocaIiohIo
equiIyhasihcreased!rom35%ih2012Io
38%ih2013wiIhacohsequehIialreducIioh
UltraHNls,in
anticipationofa
strongerdomestic
economy,have
shownincreased
optimismtowards
investinginequity
markets
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Professionals are the most disciplined in their investment approach
Investment
53
Asset Class Allocation
Ultra HNIs investment portfolio is diversified with
highest allocation to equity
ihdebIihvesImehIIo24%.LquiIymarkeIs
haveuhderper!ormedihIhelasI!ewyearsoh
accouhIo!Iheweakecohomicscehario.WiIh
IheexpecIedposiIivechahge,equiIyasah
asseIclassisexpecIedIogaihIhemosIwiIh
ihcreasedihIeresI!romulIraHNIs.SelecIulIra
HNIshavegoheIoIheexIehIo!liquidaIihg
IheirdebIahdrealesIaIeihvesImehIs
IogeheraIe!uhds!orihvesIihgihIhe
equiIymarkeIs.
RealesIaIeihvesImehIasaproporIioho!
IoIalihvesImehIremaihedcohsIahIaI29%
wiIh limiIed !resh ih!ows ihIo Ihe secIor.
UlIraHNIshaveahopIimisIicouIlookohIhis
asseIclass,poihIihgouIIhaIpriceshavehI
correcIedevehdurihguhcerIaihIimes.
O!IheIoIalrealesIaIeihvesImehIs,ulIraHNIs
IehdIoihvesI~50%ihresidehIialrealesIaIe
ahd~25%eachihlahdahdcommercialreal
esIaIe.AleadihgIrehdisihvesImehIihluxury
realesIaIeihareassuchasPuhe,CoimbaIore,
8ehgaluru,parIso!horIherhdisIricIso!
Kerala,whereleadihgdevelopersarecomihg
upwiIhluxurypro|ecIswiIhdesigher
archiIecIsIargeIedaIIheulIraHNIs.
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
UltraHNlsasset
allocationtoequity
hasincreasedto
38% in 2013 from
35%in2012
Top of the Pyramid 2014 | Kotak Wealth Management
54
Top of the Pyramid 2014 | Kotak Wealth Management Top of the Pyramid 2014 | Kotak Wealth Management
54
Investment
55
Private Equity
Investments
3.Source:LrhsI&YouhgPrivaIeequiIyrouhdupIhdia,2013
O
verIhelasIdecade,IheemergihgmarkeIshaveevihcedgreaIer
ihIeresIamohgsIihvesIorsasgrowIhraIesaredeclihihgacross
mosIo!Ihedevelopedworld.Forexample,Iheshareo!PrivaIe
LquiIy (PL) !uhds ih emergihg markeIs is risihg over Ihe lasI !ve
yearsahdhasgrowh!romapproximaIely12%o!IoIalPL
!uhd-raisihgIomoreIhah20%
3
.
PLihvesImehIhasemergedasahewihvesImehIasseIclass!orulIraHNIsIo
diversi!yIheirporI!olio.UlIraHNIswiIhlimiIedIimeIehdIogoIhroughIhePL
!uhdrouIeIogeheraIeaIIracIiveporI!olioreIurhs.HisIorically,Ihegaihshave
beeh limiIed as Ihere is a de!hiIe Iime period o! exiIihg Ihe ihvesImehIs made.
NoheIheless, iI Iehds Io be a good diversi!caIioh !rom IradiIiohal ihvesImehIs.
ForihsIahce,aleadihgAsseIMahagemehICompahyisraisihgiIssecohdIhdia-
!ocusedPL!uhdwiIhaIargeIcorpuso!`500-600crores!romIhdiahHNIs.1he
ob|ecIiveisIoselecIivelyihvesIihhigh-growIh,mid-sizeduhlisIedcompahiesih
Ihdia.1hus,IhereisihcreasedopIimismohaccouhIo!IhehewgoverhmehIwhich
hasehcouragedPL!uhdsIoraisecapiIal!romIheulIraHNIs.
1he!ollowihgsecIiohcoversIhePLihIeresIso!ulIraHNIs,Ihedrivers,Ihe
expecIaIiohsahdIhechahhelsused!orihvesImehIs.
Special Focus
Top of the Pyramid 2014 | Kotak Wealth Management
56
Exposure to PE Investment
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
ofultraHNls
havePEintheir
investment
portfolio
26%
One in four of ultra HNIs invest in PE
Inheritors and Professionals Show Inclination Towards PE
PEindustry
anticipatesthatthe
economicinitiatives
andpoliciesofthe
newgovernment
will promote both
shortand
long-termgrowth
ininvestments
UlIraHNIshaveapehchahI!oralIerhaIive
ihvesImehIopIiohswhichallow!orporI!olio
diversi!caIioh ahd ah opporIuhiIy Io geheraIe
superiorreIurhs.PLihvesImehIso!ulIraHNIs
have beeh maihly !ocused oh uhlisIed !rms,
sIarI-upsahdrealesIaIe!uhds/compahies.
However,wiIhIhe2008dowhIurhihIhe
!hahcial markeIs sIill !resh ih memory,
ihIeresI!orPLihvesImehIshasdimihished.
Ohly26%o!ulIraHNIsihIerviewedhaveah
exposureIoPLihIheirihvesImehIporI!olio.
O!IheulIraHNIsegmehIs,IhheriIorsare
moreihclihedIowardsPLihvesImehIswiIhah
overallporI!olioexposureo!~10%,drivehby
IheirdesireIoearhhigherreIurhsohIhe
ihheriIedwealIh.
PLihvesImehIsihIhdiahavedeclihedih
recehIIimesdueIolacko!uhdersIahdihgas
iIihvolvescomplexsIrucIurihgo!IheproducI,
compriseslowlevelso!IrahsparehcyabouI
uhderlyihgholdihgsahdhasuhcerIaihIy
regardihggoverhmehIpolicyahdregulaIiohs.
1heperceivedrisklevelso!PLihvesImehIsare
highowihgIoIheirlohgerIehureaswellas
IheaIIachedilliquidiIy.
Investment
57
(IGH2ETURNS.EEDFOR$IVERSICATION$RIVES0%)NVESTMENT
of Inheritors and Entrepreneurs
IhvesImehIbyulIraHNIsihIoPLisdriveh
byIhepoIehIialIogeheraIehigherreIurhs
becauseo!Ihe!ocusedihvesImehIsahdIhe
acIivemahagemehIsIraIegy.PLequiIy!uhds
IargeIhewermarkeIsahdgrowIhsecIors,
providihg Ihe required diversi!caIioh Io Ihe
ihvesImehIporI!olioo!IheulIraHNI.
SelecIPL!uhdshavedeliveredhigh
ihvesImehIreIurhsrahgihg!romsixIo
!ourIeehIimesbasedohIheIime!rameo!
ihvesImehI.IhlihewiIhIhaI,seekihghigh
reIurhs, diversi!caIioh ahd exposure Io hew
secIors were idehIi!ed as Ihe key drivers !or
PLihvesImehIo!ulIraHNIs.
Rationale for PE Investment
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Drivershavebeehscoredohascaleo!1Io4,wiIh4beihgmosIpre!erred
Higher returns and portfolio diversification are the
main drivers for PE investments
Newage
technology
start-upshave
caughtthe
attentionof
investors,withhigh
returnsandfuture
growthpotential
Top of the Pyramid 2014 | Kotak Wealth Management
58
UlIraHNIsuseacombihaIioho!sel!-ahalysis
ahdihvesImehIadvisorsIomakeihvesImehI
decisiohsihPL.
WhilemakihgihvesImehIdecisiohs,all
Ihreeclasseso!ulIraHNIssomeIimes
discusswiIhpeers.AsisIhecasewiIhall
ihvesImehIclasses,IhereIurhs!romPL
ihvesImehIsihcreasewiIhahihcreaseihIhe
Iehureo!ihvesImehI.UlIraHNIsexpecIa
reIurho!hearly15%ohihvesImehIs!ora
relaIivelyshorIIehureo!upIo5years.1he
reIurhexpecIaIiohsihcreaseIobeIweeh
25%-40%whehIheIehureismoreIhah
7years.
Overall,IheaverageduraIioho!PL
ihvesImehIsisexpecIedIoihcreaseIoaIleasI
7years!romIhecurrehI5yearsIoehsure
adequaIeIime!rame!orIheihvesImehIexiI
ahdIogeheraIereIurhscommehsuraIewiIh
Iherisk.
A leading PE fund
generatedannual
compoundedreturn
of 25-28% including
dividendearnings
onpartexitofits
three-year-old
strategicinvestment
Return Expectations from PE Investments
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Return expectations increase with the tenure of investment
Investment
59
1radiIiohally,ulIraHNIshaveihvesIedihreal
esIaIebyworkihgcloselywiIhdevelopersIo
!uhdacquisiIiohorcohsIrucIioho!apro|ecI.
1heyhave!ouhd!avourihrealesIaIePL
!uhdsasIheyparIherwiIhdeveloperswiIha
IrackrecordahdhaveexecuIiohcapabiliIies
whileevaluaIihgahihvesImehI.
Ih2013,realesIaIeprivaIeequiIy!uhds
raised`5,0006,000crore!romihvesIors
Real estate, IT, Pharma and Financial Services Preferred
Sectors for PE Investments
RealestateandlI
continue to be the
toptwosectors
forultraHNlsPE
investments,while
e-commercehas
emergedasanew
favourite
ih Ihe Ihdiah markeI. 1his !urry o! capiIal
isdrivehbyIheexpecIedposiIivechahgeih
Iheih!rasIrucIuredevelopmehIwiIhIhehew
goverhmehIihplace.
Re!ecIihg Ihe posiIive ihvesIor sehIimehI,
53%o!ulIraHNIspre!erexposureIoIhereal
esIaIesecIorwhereas43%pre!erIh!ormaIioh
1echhologyIhroughPLihvesImehIs,!ollowed
closelybyIhepharmasecIor.
Preferred Sectors for PE Investment
Source:1opo!IhePyramid2014,KoIakWealIhMahagemehI
Real estate and IT are top sectors for PE investment by ultra HNIs
Top of the Pyramid 2014 | Kotak Wealth Management
60
Disclaimer and Notices
1hisreporIismeahI!orih!ormaIiohpurposesohly.ReasohablecareahdcauIiohhasbeehIakehihpreparihgIhisreporI.1heih!ormaIiohcohIaihedihIhis
reporIhasbeehobIaihedby!romsourceswhicharecohsideredreliable.8yaccessihgahd/orusihgahyparIo!IhereporI,IheuseraccepIsIhisdisclaimer
ahd exclusioh o! liabiliIy which operaIes Io Ihe behe!I o! KoIak Mahihdra 8ahk LimiIed. KoIak does hoI guarahIee Ihe accuracy, adequacy or compleIehess
o!ahyih!ormaIiohcohIaihedihIhereporIahdheiIhershalliIberespohsible!orahyerrorsoromissiohsihor!orIheresulIsobIaihed!romIheuseo!,
suchih!ormaIioh.NoIhirdparIywhoseih!ormaIiohisre!erehcedihIhisreporIuhdercrediIIoiI,assumesahyliabiliIyIowardsIheuserwiIhrespecIIoiIs
ih!ormaIioh.KoIakshallhoIbeliable!orahydecisiohsmadebyIheuserbasedohIhisreporI(ihcludihgIhoseo!ihvesImehIordivesIiIure)ahdIheuser
Iakes!ullrespohsibiliIy!orIheirdecisiohsmadebasedohIhisreporI.KoIakshallhoIbeliableIoahyusero!IhisreporI(ahdexpresslydisclaimliabiliIy)!or
ahy loss, damage o! ahy haIure, ihcludihg buI hoI limiIed Io direcI, ihdirecI, puhiIive, special, exemplary, cohsequehIial losses, loss o! pro!I, losI busihess
ahdecohomiclossregardlesso!Ihecauseor!ormo!acIiohahdregardlesso!wheIherorhoIahysuchlosscouldhavebeeh!oreseeh.
*1hereporIbelohgsIoKoIak.AhyIhirdparIybrahds,hamesorIrademarkscohIaihedihIhereporIbelohgIoIherelevahIIhirdparIies.
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