rahul_parab2006
MP Guru
Financial Services
Last Updated: July-September 2008
The Indian financial sector is on a roll. Driven by a strong investor interest and an expanding market, the industry is also becoming more vibrant, with new types of products and services being offered to meet the needs of the booming economy.
The buoyancy in the economy is estimated to lead to a four-fold increase in India's investable wealth from US$ 250 billion in 2007 to US$ 1 trillion by 2012. Simultaneously, according to a report by Celent, an international consultancy firm, India's wealth management segment will rise to an estimated 42 million households by 2012 from about 13 million households in 2007.
Clearly, there is huge potential in this segment. Significantly, wealth management revenues are expected to account for 32-37 per cent of the total full-service financial institutions by 2012. The market is also expected to undergo a structural transformation with organised players increasing their market share.
The attractiveness of India in the global financial market is also reflected in the Indian cities - Mumbai, New Delhi and Bangalore - finding a place of pride in the list of the world's top 75 commercial centres, as per the 2008 'Mastercard Worldwide Centres of Commerce Index'.
Stock Markets
The year 2007 saw Indian stock markets scaling new peaks, with the popular sensex crossing 21,000 and Nifty crossing the 6,000 mark for the first time. It was the third best performing market in the world with a dollar return of 71.23 per cent. The popular Bombay Stock Exchange (BSE) benchmark index, Sensex, posted its highest ever absolute gain of 6500 points in over two decades.
This performance of Indian stock markets has led to the total investor wealth of Bombay Stock Exchange (BSE) surging to a record high of over US$ 1.7 trillion, with an average increase of over US$ 10.18 million in every minute of trading during 2007. At the end of 2006, the total market capitalisation stood at US$ 812 billion.
Simultaneously, the National Stock Exchange (NSE) has climbed to the top spot in stock futures contracts and number-two slot in the index futures segment in the world.
According to Ernst & Young, India was also the fifth largest market in terms of number of IPOs and seventh largest in terms of the proceeds for the year. Indian companies raised a whopping US$ 11.48 billion through public issues in 2007, which is 83 per cent higher than US$ 6.28 billion mobilised in 2006.
The robust performance of the Indian stock markets can also be seen in the huge increase in the funds mobilised by the corporate India. During 2007-08, India Inc mobilised a whopping US$ 8.13 billion through issue of shares on rights issue, which is almost an eight-fold increase over US$ 926.32 million raised in 2006-07. In fact, the mobilisation of the funds in 2007-08 was more than the combined mobilisation of the preceding 12 years.
The flurry of fund raising activity by the companies on the Indian stock exchange has continued in 2008. Fund raising by India Inc through IPOs rose by a whopping 62 per cent since the beginning of 2008 to 29 May, 2008 to US$ 4.2 billion, against US$ 2.6 billion during the same period in 2006, according to global deal data provider Dealogic. Significantly, fund mobilisation during the first quarter of 2008 is the second highest for a quarter in the Indian capital's history.
Private Equity
The year 2007 was a watershed for private equity market, which has emerged as the most preferred mode of fund mobilisation for India Inc. The capital mobilised through this route was higher than the funds mobilised through IPOs, follow-on issues and qualified institutional placements put together.
India, in fact, topped the Asia private equity chart for the first time in 2007 in terms of aggregate deal value. According to Grant Thornton, a total of US$ 17.14 billion was mobilised through 386 deals by India Inc in 2007, compared to US$ 7.8 billion in 2006. Real estate, infrastructure, banking and financial services were the dominant sectors attracting about 55 per cent of the total private equity investments.
The growth continues apace in 2008. The total number of PE deals during the first five months of 2008 stood at 170, with an announced value of US$ 6.39 billion as against 159 deals amounting to US$ 4.97 billion during the corresponding period in 2007. India is among the top 10 countries in terms of value of private equity deals across the world, as per the global deal tracking firm Zephyr.
Mutual Funds
India is also one of the fastest growing markets for mutual funds industry attracting a host of global players. The combination of increasing number of fund houses (along with new schemes) and increase in the number of people parking their savings in mutual funds has resulted in total funds mobilisation, increasing at a whopping 124.93 per cent during 2007-08 to stand at US$ 1.11 trillion as against US$ 485.13 billion in 2006-07.
The average assets under management (AUM) of the mutual fund industry for March 2008 stood at US$ 134.76 billion as against US$ 89.86 billion at the end of 2006, representing a year-on-year growth of 49.96 per cent.
Last Updated: July-September 2008
The Indian financial sector is on a roll. Driven by a strong investor interest and an expanding market, the industry is also becoming more vibrant, with new types of products and services being offered to meet the needs of the booming economy.
The buoyancy in the economy is estimated to lead to a four-fold increase in India's investable wealth from US$ 250 billion in 2007 to US$ 1 trillion by 2012. Simultaneously, according to a report by Celent, an international consultancy firm, India's wealth management segment will rise to an estimated 42 million households by 2012 from about 13 million households in 2007.
Clearly, there is huge potential in this segment. Significantly, wealth management revenues are expected to account for 32-37 per cent of the total full-service financial institutions by 2012. The market is also expected to undergo a structural transformation with organised players increasing their market share.
The attractiveness of India in the global financial market is also reflected in the Indian cities - Mumbai, New Delhi and Bangalore - finding a place of pride in the list of the world's top 75 commercial centres, as per the 2008 'Mastercard Worldwide Centres of Commerce Index'.
Stock Markets
The year 2007 saw Indian stock markets scaling new peaks, with the popular sensex crossing 21,000 and Nifty crossing the 6,000 mark for the first time. It was the third best performing market in the world with a dollar return of 71.23 per cent. The popular Bombay Stock Exchange (BSE) benchmark index, Sensex, posted its highest ever absolute gain of 6500 points in over two decades.
This performance of Indian stock markets has led to the total investor wealth of Bombay Stock Exchange (BSE) surging to a record high of over US$ 1.7 trillion, with an average increase of over US$ 10.18 million in every minute of trading during 2007. At the end of 2006, the total market capitalisation stood at US$ 812 billion.
Simultaneously, the National Stock Exchange (NSE) has climbed to the top spot in stock futures contracts and number-two slot in the index futures segment in the world.
According to Ernst & Young, India was also the fifth largest market in terms of number of IPOs and seventh largest in terms of the proceeds for the year. Indian companies raised a whopping US$ 11.48 billion through public issues in 2007, which is 83 per cent higher than US$ 6.28 billion mobilised in 2006.
The robust performance of the Indian stock markets can also be seen in the huge increase in the funds mobilised by the corporate India. During 2007-08, India Inc mobilised a whopping US$ 8.13 billion through issue of shares on rights issue, which is almost an eight-fold increase over US$ 926.32 million raised in 2006-07. In fact, the mobilisation of the funds in 2007-08 was more than the combined mobilisation of the preceding 12 years.
The flurry of fund raising activity by the companies on the Indian stock exchange has continued in 2008. Fund raising by India Inc through IPOs rose by a whopping 62 per cent since the beginning of 2008 to 29 May, 2008 to US$ 4.2 billion, against US$ 2.6 billion during the same period in 2006, according to global deal data provider Dealogic. Significantly, fund mobilisation during the first quarter of 2008 is the second highest for a quarter in the Indian capital's history.
Private Equity
The year 2007 was a watershed for private equity market, which has emerged as the most preferred mode of fund mobilisation for India Inc. The capital mobilised through this route was higher than the funds mobilised through IPOs, follow-on issues and qualified institutional placements put together.
India, in fact, topped the Asia private equity chart for the first time in 2007 in terms of aggregate deal value. According to Grant Thornton, a total of US$ 17.14 billion was mobilised through 386 deals by India Inc in 2007, compared to US$ 7.8 billion in 2006. Real estate, infrastructure, banking and financial services were the dominant sectors attracting about 55 per cent of the total private equity investments.
The growth continues apace in 2008. The total number of PE deals during the first five months of 2008 stood at 170, with an announced value of US$ 6.39 billion as against 159 deals amounting to US$ 4.97 billion during the corresponding period in 2007. India is among the top 10 countries in terms of value of private equity deals across the world, as per the global deal tracking firm Zephyr.
Mutual Funds
India is also one of the fastest growing markets for mutual funds industry attracting a host of global players. The combination of increasing number of fund houses (along with new schemes) and increase in the number of people parking their savings in mutual funds has resulted in total funds mobilisation, increasing at a whopping 124.93 per cent during 2007-08 to stand at US$ 1.11 trillion as against US$ 485.13 billion in 2006-07.
The average assets under management (AUM) of the mutual fund industry for March 2008 stood at US$ 134.76 billion as against US$ 89.86 billion at the end of 2006, representing a year-on-year growth of 49.96 per cent.