UBS Group AG is exploring various partnership options for wealth management in India to tackle the intensely competitive environment, according to people with knowledge of the matter. 

The Swiss bank has held early-stage internal discussions about possibilities including buying a stake in a local firm to form a joint venture, the people said, asking not to be named discussing private information. While no decisions have been made so far, the idea is such a tie-up will ease the efforts of growing what is a very small business by extending its reach to the wealthy in India, they said. 

A spokesperson for UBS declined to comment.

India’s massive wealth generation has attracted a slew of global banks, though they face intense competition from local incumbents, who already have big teams and distribution channels. UBS, which exited India’s onshore wealth business about a decade ago, has been integrating the Credit Suisse team it acquired to make a comeback in what it sees as an area of growth.

Still, the firm has become a hunting ground for other wealth managers that have poached several of its senior executives, people with knowledge of the matter said earlier. The number of its wealth management staff in India has fallen to over 30, from about 40 in April 2023, though UBS continues to recruit, one of the people said.

With Iqbal Khan, a co-head of global wealth management, relocating to Asia this month, many management discussions over strategy are on the table, the people said. UBS’ deliberations could change, and it may still choose to build out the business without a joint venture or acquisitions, they said. 

UBS’ considerations on India aren’t an isolated one, even if it fully owns most of its operations in Asia. The firm has joint ventures in Japan and China, where domestic firms dominate the markets. In Japan, it holds a 51% stake in UBS SuMi Trust Wealth Management Co, while Tokyo-based Sumitomo Mitsui Trust Holdings owns the rest. In China, UBS controls 67% of a local unit.

The discussions to invest in a wealth manager in India are happening when valuations of these businesses have risen sharply, which could dampen the appetite, the people said. India’s stock markets are on a tear, and independent wealth management firms are favoured among private equity managers, who are attracted by the strong growth of these fee-generating businesses. 

Blackstone Inc acquired a majority stake in ASK Investment Managers Ltd, while Bain Capital took a minority stake in IIFL Wealth Management Ltd, now known as 360 One WAM Ltd, in 2022. Private equity firm PAG invested in Edelweiss Wealth Management in 2021, and most recently, Peak XV Partners bought a stake in Neo Group. KKR was one of the earliest players and acquired Avendus Capital in 2015, a firm that’s also expanding its wealth business. 

Amid this activity, banks like HSBC Holdings plc and Barclays plc are ramping up their teams, products and services to cater to the rising affluent. Local lending giants like State Bank of India, HDFC Bank Ltd and Kotak Mahindra Bank Ltd are using their extensive branch networks to capture more assets. 

India’s booming economy has created fortunes, and there is a growing acceptance of professional wealth managers in the country. The number of individuals with US$30 million of assets is expected to grow by 50% between 2023 and 2028, according to a Knight Frank wealth report. India is expected to generate about US$730 billion of wealth through 2028, Boston Consulting Group has said. 

  - Bloomberg