HNI wealth up 23% to Rs 128 tn in FY15; equities find favour

The country has witnessed a massive jump both in the number of high networth individuals (HNIs) as well as their net worth with the latter increasing 23 per cent over the year to Rs 128 trillion in spite of sluggish economic growth, says a report.
The number of HNIs grew to 1,37,100 by end of FY15, up 17 per cent from 1,17,000 a year ago, according to the report by Kotak Wealth Management and consultancy firm EY.
It expects the number of HNIs to grow at 20 per cent every year over the next five years to 3,48,000 by the end of 2020.

It estimated the net worth of HNIs to grow to Rs 415 trillion by end of FY20.
A person having a minimum net worth of Rs 25 crore or a professional with an annual income of over Rs 3 crore is labelled as an HNI. The two companies interviewed 225 such HNIs while arriving at their conclusions.
The surge in HNIs and their net worth comes even as questions are being raised about the country's growth and some sections pointing to rising income disparities with the gap between "the haves" and "the have-nots" steadily increasing.

The surge in the number of start-ups, particularly in the e-commerce segment, has helped bring down the average age of an HNI, it said, without giving the exact age.

However, the report said these new-age entrepreneurs prefer to invest back into their businesses rather than other classes which are preferred by wealth inheritors.
The study has found that an increasing number of HNIs are diverting their attention to equities as an asset class, and the attraction of realty is dipping.
Kotak Mahindra Bank Joint Managing Director C Jayaram said there is a slump in the residential segment while commercial space is looking a bit better. The residential segment will continue to remain muted for two more years.
In equities, a bulk of the HNIs prefer investing in banking and infrastructure stocks, Jayaram said, pointing out that this suggests a preference for riding on the India story where banks are the barometers of the growth and also the ever -increasing demand for infrastructure.

There is also a diversity in cities where the growing number of HNIs are based, it said, adding there are unique characteristics of every city.
Citing survey data, he said HNIs in Chandigarh have higher spends and prefer investing in physical assets like realty.
Ahmedabad, on the other hand, has higher discretionary spends with a greater appetite for financial investments, while HNIs in Chennai allot more to charity and prefer investing in alternative assets like gold.