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Ahmadoff & Company
Private Wealth in Modern India
Entrepreneurship at Heart
private capital intelligence…
This report is prepared by Ahmadoff & Company’s research team based on the studies covering Forbes billionaires of different years.
Agenda
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Private Wealth in Modern India > Agenda
o Comparable environment
o Wealth overview
o Who are the new billionaires?
o Sustaining capital: Strategic choice vs. Pragmatism
o Political involvement of Business Elites
o Family Circle
o Wealth utilization. Redistribution vehicles
o Myths and realities
o Authors
India: New History of Private Wealth research is a study of Forbes billionaires of the last two decades and covers material events and challenges of their lives in addition to the wealth. The materials used to prepare this report is intellectual property of Ahmadoff & Company.
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Source: Forbes.com, IMF, Ahmadoff & Company analysis
Comparable environment
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AV. AGE OF THE BILLIONAIRES 2005 | 2016
NUMBER OF BILLIONAIRES 2005 | 2016
BILLIONAIRE-FRIENDLY INDUSTRIES 2016
BILLIONAIRES’ WEALTH TO GDP 2005 | 2016
57 | 64 65 | 63
12 | 84 678 | 1810
Diversified,
healthcare/pharma,
industrial suppliers
Financial
investments,
technology, retail
7.4% | 11.0% 3.8% | 8.6%
World
GDP GROWTH between 2005 and 2016 170% 30%
India
Private Wealth in Modern India > Comparable environment
Source: Forbes.com, Ahmadoff & Company analysis
Wealth overview
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7
2 2
4
19
33 31
1
6 8
31
58
70
1996 2000 2005 2010 2015 2017
Family business
Number of billionaires in India Traditions of Indian wealth philosophy go back by
centuries in the history. We have analyzed only
small and the latest part of this history to reveal
core trends in ownership and wealth creation.
Number of new wealthy emerged in the last two
decades in India both born in family businesses
and self-made entrepreneurs due to created
massive local economy and globalized Indian
enterprises.
Private Wealth in Modern India > Wealth overview
Important trend was the share of Indian billionaires
in global billionaires club which has reached 5%
from 1% in the last twenty years due to created
entrepreneural and enhanced family wealth. India
has seen a new billionaire almost every month
after 2010. Increased penetration of the banking
system has created opportunities for real sector to
grow, further to foreign direct investors’ role in
market capitalization hike. 0
50
100
150
200
250
300
350
1996 2000 2005 2010 2015 2017
Total wealth of Indian billionaires (bln. USD)
Who are the new billionaires?
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Private Wealth in Modern India > Who are the new billionaires?
Which industries have created billionaires in India?
40%
30%
20% 20%
Div
ers
ifie
d g
rou
ps
Te
ch
no
log
y
Ind
ustr
ial s
up
plie
rs
Oth
er
1995 - 2005
28%
21% 18%
33%
Rea
l e
sta
te/C
on
str
uctio
n
Div
ers
ifie
d g
rou
ps
Hea
lth
ca
re/P
ha
rma
Oth
er
17% 17% 15%
52%
Div
ers
ifie
d g
rou
ps
Hea
lth
ca
re/P
ha
rma
Ind
ustr
ial s
up
plie
rs
Oth
er
Emerging new wealthy
2005 - 2010
‘Infrastructure’ wealth
2010 - 2017
‘Demography’ wealth
Average age of new billionaires
53 57 61
Source: Forbes.com, Ahmadoff & Company analysis
Sustaining capital: Strategic choice vs. Pragmatism
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Private Wealth in Modern India > Sustaining capital: Strategic choice vs. Pragmatism
Dropped-off billionaires 5+
ye
ar
liste
d
bill
iona
ire
s
Ne
w b
illio
na
ire
s
D/o
- 12% of billionaires, on average left the list during the
last two years;
- During the 2005-2010 only a billionaire has dropped
of against 39 new-comers; it is 12 to 22 for 2015-
2017;
- Two out of three of them were from construction and
real estate industry in the last five years, i.e. 8 of 12
billionaires;
Every industry has a growth and decline phases
throughout the economic cycle and some UNHWIs
choose certain growth industries while missing exit
options in downturn, while others sit on the multi-
angle diversified or flexible industries with less
switching costs. It is reasoned by family culture,
political involvement, individual view to personal
wealth utilization which is indirectly linked to the
economic activities and forms the structure of the
behaviourally optimized investment portfolio.
Source: Forbes.com, Ahmadoff & Company analysis
-15
5
25
45
65
85
inherited
self-made
Political involvement of Business Elites
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Private Wealth in Modern India > Political involvement of Business Elites
Billionaires in Politics Business and Political Elites do not seem
be merged in India, oppositely shift towards
separation in the last years. A typical
politically involved Indian billionaire sources
and manages his wealth as large
industrial suppliers or diversified
conglomerates similar to the other parts of
the world.
High growth period of the economy between
2005 and 2010 supported entrepreneurial
community with pure business careers and
visible shift of re-balancing elites in wealth
context came during those period.
In India, billionaires’ history explains
inherited wealthy tends towards politics
more than self-made entrepreneurs,
former with - 20%, the latter - 14%.
Source: Forbes.com, Ahmadoff & Company analysis
18% 16% 15%
82% 84% 85%
2010 2015 2017
Enhanced Political involvement Passive in politics
Family Circle
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Private Wealth in Modern India > Family Circle
96%
4% female
male
84%
8%
5%
3%
small family (2 or 3 children)
big family (4 or more)
one-child family
no child
Number of children in rich families
Gender of billionaires
16% 24%
60%
Family structure
Average number of children in
rich families is 2.3 according our
research, smaller families with
sons and daughters are
billionaires’ existing major family
structure in India.
Marriage and family affairs play
important role and only 2% of
billionaires have got married
second time, in other cases they
keep long and calm life with their
family.
Currently 4 woman billionaires are
part of the Forbes Billionaires list
and three out of four have
inherited from their husbands. S
on
(s)
& d
au
gh
ter(
s)
On
ly s
on
(s)
On
ly d
au
gh
ter(
s)
Source: Forbes.com, Ahmadoff & Company analysis
Wealth utilization. Redistribution vehicles
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Private Wealth in Modern India > Wealth utilization. Redistribution vehicles
FAMILY BUSINESS
50%
FAMILY BUSINESS
ENHANCED WITH
PHILANTHROPY
42%
PHILANTHROPY
8%
Source: Forbes.com, Ahmadoff & Company analysis
Myths and realities
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Private Wealth in Modern India > Myths and realities
Large wealth is about
inheritance
Myth 1.
Real estate/Construction industry
always tops for billionaires
Myth 2.
Indian billionaires are in politics
as well
Myth 3.
Number of children is high in
wealthy families
Myth 4.
A billionaire’s only aim is build
empire for his children.
Myth 5.
70% of Indian billionaires are self-made
Two out of three billionaires in real
estate/construction industry dropped
off in the last 7 years
Only 15% of Indian billionaires or family
members have hold/holds political and
law-making positions.
2.3 children per billionaire family is
average in India
Half of Indian billionaires have created
philanthropic vehicles to give back to
society
Authors
11 Ahmadoff & Company
Fakhri Ahmadov, CIWM, TEP is managing director at the Ahmadoff & Company and the Family Office leader of the firm. He is a topic leader for private wealth history for the research. You may contact him by e-mail at [email protected]. Nadir Bakhishov is executive director at the Ahmadoff and Head of Regional Relationship Management group. He is a senior advisor for the research report. You may contact him by e-mail at [email protected]. Zulfiyya Valiyeva is wealth analyst at the firm’s data analysis and research unit. You may contact him by e-mail at [email protected].
This report has been prepared by Ahmadoff & Company for wealthy people, their heirs and families, private wealth community, including family offices, private shareholders and other focused stakeholders. The report contains an analysis of profiles of the richest people of the planet with specific focus on India’s rich people according to Forbes magazine. This material and its contents do not constitute financial or other professional advice, and specific advice should be sought about your specific circumstances.
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Private Wealth in Modern India > Authors
