DSIJ Interview with,Prabodh Agarwal Group CFO, IIFL

"The environment is quite good for financial services companies like us"

As a CFO of IIFL Holdings, what are your top three strategic visions in the next few years?

IIFL is one of the largest financial services firms in India. We primarily have three businesses — IIF Finance, IIFL Wealth & IIFL Securities. IIFL Finance has loan AUMs of Rs.311.3 billion, which is retail-focused and diversified. 

The products we offer are home loan, loan against property, SME and micro finance loans. IIFL Wealth is a leader in the wealth management industry with assets under advise and management exceeding Rs.1,40,000 crore. 

IIFL Securities is India's leading securities trading company. Marquee global investors like Fairfax, General Atlantic and CDC Group have invested in IIFL Holdings, IIFL Wealth and IIFL Finance, respectively. We serve over four million customers across the length and breadth of India. Our three-pronged Vision 2020 is doubling, durability and derisking. The first vision is doubling of revenue between FY16 and FY20 and profit by 2.5X during the same period. The second is reducing volatility and cyclicality of earnings in all businesses. The third is diversifying revenue sources with focus on financial services. 

Looking forward, which business segment in your view will grow the fastest? 

All three businesses have been doing well. The environment is quite good for financial services companies like us. The credit demand is good for the segment of customers we are catering and the same shows in our results every quarter. Our wealth management business has shown fantastic growth and has achieved leadership position in a short span of time. I believe all businesses have tremendous future and should growth at a fast pace. 

Please give more details about your company's plan for demerger of three key businesses? 

We have announced the demerger of our three key businesses earlier this year. The businesses are IIFL Finance, IIFL Wealth and IIFL Securities. We believe each of the businesses have achieved a certain scale and size in terms of the total AUMs or profit and, therefore, it is in a position to stand on its own. 

We believe that by separating them we will allow them to grow to their full potential. We have filed the scheme with the stock exchanges and regulators. The process would require approvals of the regulators, shareholders and creditors. After the approval, the scheme will be filed with the ROC and then they are ready for listing. 

IIFL Wealth is amongst the top three wealth management companies in India. Please share the growth outlook of the IIFL Wealth division. While I can't give you a future outlook, here is a glimpse to wealth performance in Q4 FY18, which is indicative of the growth. IIFL Wealth's PAT grew at 37% YoY to Rs.103 crore. Our assets under advice management and distribution have grown 3% on Q-o-Q and 39% Y-o-Y to reach Rs.1.32 trillion. 

We hired 14 bankers during the quarter, taking the total number of bankers to 330, to further drive the growth momentum. IIFL Wealth offers a broad range of product and services to participate in a larger share of the client wallet. This includes financial products distribution, advisory, brokerage, asset management, credit solutions and estate planning. We raised net new money of Rs.25053 crore in FY18 versus Rs.22535 crore last year. 

During the quarter, the team garnered AUMs or commitments in excess of Rs.4000 crore in wide-ranging products. AIF assets grew 52% Y-o-Y to Rs.11736 crore. The total commitment in our ‘Special Opportunities Fund', which invests in pre-IPO and IPO situations, is now close to Rs.8700 crore.

A new Affordable Housing Fund was launched during last quarter, which also received an outstanding response with the commitment of more than Rs.1360 crore. IIFL Wealth Finance, which offers loan against securities and margin funding to high networth individuals, grew its loan book 15% Q-o-Q and 85% Y-o-Y to Rs.6701 crore. Average lending rate for this book is around 10.3%. This kind of business growth is likely to continue. 

What is the most challenging thing you faced in your current role? 

Understanding intricacies of different product lines (we have nearly ten products in the NBFC and several more in other businesses) was both challenging as well as enjoyable. It was great learning.