Daybreak - How India's young millionaires are defying family norms to create new sources of wealth

Episode Date: November 6, 2024

Lately, new breed of millionaire heirs  have been dabbling with family offices in India . These are entities that exist solely to manage the fortunes of these ultra-rich families. While these offices have been around in some of the world’s biggest financial capitals for a long time now, in India, they are catching on now . What’s really interesting is that these single and multi family offices haven’t just been popping up in big metro cities, they are also gaining popularity in tier 2 cities like Surat, Ludhiana, Lucknow, Coimbatore and the like. This largely has to do with the growing number of rich people in a lot of smaller cities and towns. A byproduct of this seems to be the rise in family offices. In the last six years alone, the number of family offices in India has shot up from 45 to 300. Some of these function like a seed-stage venture capital firm and invest money to the tune of hundreds of millions of dollars.Tune in.**Correction: In this episode the host mistakenly referred to Nishant Batra as someone who leads investments at Catamaran, whereas he works for Dholakia Ventures. We apologise for the error.Daybreak Unwind recommendations for 'favourite translated novels.'Rahel: The Vegetarian by Han King            Hangwoman by KR MeeraSnigdha: The Legends of Khasak by OV Vijayan                 There's a Carnival Today by Indra Bahadur RaiListeners: Ghachar Ghochar by Vivek Shanbag Daybreak is now on WhatsApp at [phone]. Text us and tell us what you thought of the episode!Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me. My interruptions, my analogies and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret source stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first studio. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Nikunj Poddar is a 24-year-old from Surat with a degree in finance from New York University. Running a business is in his blood. You see, for well over three decades now, Nikunz's family has been in the business of tech.

textiles, diamonds and real estate. From the time that he was 17, Nikun spent a lot of time on the factory floor of his family's textile dying business. And it made sense. This was, after all, his legacy that would eventually be handed down to him. But Nikunsch had bigger dreams for the family business. He did not want to do things the old-fashioned way. Even when he was a teenager, after spending his time at the factory,

he would be picking apart market data with some of his other friends. Someday he dreamt of doing something in the space of finance. That day has eventually come now. Today, at the age of 24, Nikunj represents a new breed of heirs who have been dabbling in the family office trend. These are entities that exist solely to manage the fortunes of these ultra-rich families. These family offices have been.

a phenomenon in some of the world's biggest financial capitals for a while now. But in India, it is a more recent trend that has been picking up pace now more than ever before. And what is really interesting is that these single and multi-family offices haven't just been popping up in big metro cities. They are also gaining popularity in tier two cities like Surat, Lodiana, Lucknow, Coimator and the likes. And this largely has to do with the growing number of rich people in smaller cities and towns. In Surat alone, where Nikunj is from, the number of wealthy individuals has nearly triple in the last four years.

In fact, it has managed to nab a spot in the list of 10 cities with people with a net worth of over 1,000 crore rupees. So, in the last six years alone, the number of family offices in India has shot up from 45 to 300. You see, now that the next generation of heirs, generally foreign-educated like Nikunsch, are entering the picture, a lot of these businesses are starting to look at their money a little bit differently. Back in the day, these businesses would put in all the money that they were making back into the same business. But now, many of these families like Nikunjus are pumping out the money into their family office. They are looking at money as a means to

boost their wealth by making unconventional high-risk investments for higher returns. But of course, these investments are, well, risky business. Studies show that globally only one-third of family businesses survive into the second generation. So, why do it then? In this episode, we delve into this new wave of family offices in India. Plus, we have a brand-new edition of Daybreak. unwinded. So, stay tuned. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Das Sharma, and I don't

chase the news cycle. Instead, every day of the week, my colleague Rahal Philipose and I will come to you with one business story that is worth understanding and worth your time. Today is Thursday, the 7th of November. The concept of family offices is catching on in India in some really interesting ways. Take the case of Saoji Dhullah. He happens to be the richest man in Surat with a net worth of 12,000 crore rupees. And he made his money primarily running a diamond manufacturing and export company called Hari Krishna exports. Now, like Nikunj, Dholakia's son Dravia is also making some money moves for his family.

After getting a business degree from New York-based Pace University, he set up Dholakia ventures in 2020. This is a family office that functions essentially like a seed stage venture capital firm. Today, it has assets to the tune of about 2,000 crore rupees. With VC funds like Artha Ventures, Bloom Ventures and Inflection Point Ventures as co-investors, it's invested in over 65 startups so far. The list includes some reasonably well-known names like electric vehicle brand Zip and fashion jewelry brand Milora. Dholakia Ventures has been known to sign checks worth up to $14 million at times.

So, as you can tell, there is a lot of money at play here. For instance, let us look at one of the oldest family offices in the country, Premji Invest. This is the family office of WIPRO founder-chairman Azeem-Premji. Now, typically, Premji Invest closes roughly 6 to 8 deals in a year, signing average checks valued at anywhere between 25 to 100 million US dollars. Or take the case of Bangal-based Catamaran Ventures, which was set up by Infasis co-founder Narayan Murthy. Data from the market research firm traction shows that it invests in a mere three to four companies in a year, very select, with check sizes ranging from 10 million to 200 million US dollars.

In Catamaran's case, the firm started investing as limited partners in funds of venture capital firms. But for a change, let us look beyond the who's who of the well-heeled world. Let's go back to Surat, where Nikunja's family set up their family office in early 2024. Three years before that, close family friends and business partners of his family, the Agarwal's, established a family office of their own called Shubalakshmi. They both hired a common-six-member research team for their respective entities. Nekunjborda's family invests capital from their existing businesses. For example, right now they are contemplating exploring uncharted waters with Red Sea,

a Dubai-based startup that grows strawberries and other fruits and vegetables in the arid lands of the Middle East. Meanwhile, the Agarwal family has benefited from industry consolidation. In September 2022, Shubalakshmi's polyester business was acquired by Reliance Industries for close to 1,600 crore rupees, which ended up creating a wealth pool for the Agarwal family. Together, both these family offices have 500 crore rupees in assets under management. But how are these family offices, particularly the lesser-known ones, able to source new deals? Stay tuned to find out, but before that, Here's a message from Rahil.

I am interrupting this episode to make a very exciting announcement. If you've been on social media since the beginning of this year, you may have noticed that run clubs are really having their moment. They are blowing up. Or should I say gaining pace across the country. And this resurgence of run clubs is largely being driven by young people, Gen Zs and late millennials. The best part is that most of these runners are first timers.

So, we were curious. What is making hundreds of young people take to running? Are they all desperately seeking that runners high? Or is there something more to it? Well, to find out, Snigda and I will be joining the 56 Run Club here in Bangalore on Sunday morning. The best part is that you can join us too. We are organising our first ever live recording. So if you are in your 20s and would like to feature in an upcoming episode of Daybreak, sign up for the

Sunday run. The sign-up link and the details of the run will be in the show notes of this episode. Remember the dola kiyas? Well, for the last two years, they have been hosting an annual networking event called DV8 Infinite Possibilities in Surat. It is a very popular event. More than 3,000 people, top startup founders, investors, the works come all the way to Surat Gujarat to attend it. In fact, the first season of the event was in association. with the G20 startups. It was actually called the G20 of startups. The fact that this event got the kind of coverage that it did

and that it managed to attract thousands of big wigs is a clear indicator that this space is stirring up. The Ken reporter Akriti Bhala spoke to a family office analyst to understand how it works. They said that if a family office in Delhi and Mumbai is comfortable with an 18 to 25% return every year, The expectation is to make returns of 30% or more in non-metro cities. Akrati was also curious to understand how these rich people split their investments.

In the case of the Poddars and the Agarwal's, there is a three-way split. Listed equities, unlisted equities and bullion. So gold, silver and digital gold. In the unlisted space, they invest directly in companies and through alternative funds like hedge funds and venture capital. The focus on this third area is growing quite a bit, especially among younger generation. While their fathers and grandfathers preferred traditional assets like gold and real estate, the younger members are eager to explore new options. Now, it's not like family businesses did not make investments in the past, but usually investments were made earlier through the parent company.

But now it is being done through a separate legal entity that exists, for investing only personal wealth. They also relied on portfolio managers to invest their money in the market. However, in many cases, they were distributors disguised as advisors, which meant that their advice came with a hidden agenda or fee. This discouraged many family offices from hiring professionals. And there is also an underlying hesitation to share personal wealth with outsiders. In closely knit communities, news spreads quick.

adding an extra layer of caution. There is a fear that if you bring an outsider into the loop, then word about your wealth will spread. Which is why many families appointed a trusted insider, like an accountant or a former chief financial officer or chief investment officer. This person handles a team of five to ten analysts who are either finance graduates or are pursuing their chartered accountancy and CFA degrees. But the thing is, even chief investment officers,

are often not up to date with the latest buzz in the market. After all, as families grow, the risk of wealth erosion also increases. Which is why usually only 10 to 15% of a high net worth individual's wealth actually makes it to the third generation. A study that looked into family-run businesses and succession found that successful businesses always diversified their financial portfolios and embraced high-risk opportunities. Each generation creates new sources of wealth.

So, as the Indian economy booms and more and more millionaires and billionaires enter the market, the family office space is only going to get bigger. For the new generation, the pressure is on to make sure that they are not just taking their businesses forward instead of backward, but they're also building their own sources of wealth. Hang on because the episode is not over yet. Coming up next, daybreak unwinded. Hello and welcome back to another segment of daybreak unwind. It's Thursday and you know what that means.

Snickda and I are here to hook you up. More importantly, hook ourselves up with something to do this weekend. Yes. Whether it is chilling at home, reading a book or watching something on TV or even going out to check out a cool new place in town. Right, we were on a break because of Diwali, but we are officially back. If you're a regular listener here, you would know that the theme of this week's daybreak unwind is actually translation. Something that both Sikda and I are very passionate about.

We love a good translation. We want to know what your favourite translated novels were. And we have some lovely recommendations to share with all of you. But before we get into all of that, we actually have something else we want to discuss. Yes. You know, thanks to our new... WhatsApp number, we've been able to talk to so many of you and so many of you were kind enough to share your recommendations with us for this segment.

Some of you also gave us feedback on the show and how we can make it better and we really, really, really appreciate it. Please keep it coming. But, you know, it's also made us think a little bit about what exactly we're doing with this segment, right, Rahil? Yeah, it has made us quite introspective in the sense. that, you know, we're constantly trying to figure out what we can do differently and how we can make daybreak better for you, right?

Our listeners, that's all that matters to us. And we thought, you know, why not start with Unwind? This is a space where we get to share some of our interests with you that are outside the realm of business and tech, right? Which is why we were so excited about this segment. Yeah. Yeah, we've spoken about books, films, TV shows, even food. Like, food spots, right?

at different cities in different cities and towns. And we've had some great weeks where, you know, you've sent us so many recommendations. But there have been some very slow weeks as well. I mean, of course, the last couple of weeks we understand because it was Diwali. But for example, translations is something that we thought a lot of recommendations will come in. But we barely had any. And that kind of got us thinking, you know. Yeah.

Is there, you know, are we missing some? something here, are we only talking about things that interest us? We also want to know what interests you, right? You wish we were, for instance, maybe talking about pop culture a little more or history or something else entirely, right? Should we even be rethinking the whole format? Sikdha and I actually do have a few ideas and we'll definitely be trying them out starting next week. Honestly, the great part here is that the sky is the limit.

Daybreak, can look like anything. Anything we want to be. Yeah, it can be what you wanted to be. So we really want to know what you think. What do you want us to talk about? What would you love to talk about on the show? You know, of course... What would get you to talk to us more?

Exactly. Yeah. We want to know what excites you. Exactly. You can WhatsApp us. The number, of course, will be in the show notes. Correct. Shall we move on to today's recommendation?

Yes, please. So, Rahel, you're going to start because you came up with this theme. Yeah. Well, Sigda, the reason I thought of translations was actually because of this year's Nobel Prize for Literature, it went to a South Korean author named Han Kang. For the first time. Yeah, exactly.

For the first time ever, it was a really, really big deal. My recommendation this week is actually her book. It's called The Vegetarian. Oh, yes. I read it a couple years ago. The book actually released in 2007. And it's this deceptively slim books, think?

I've seen it, but I'm not read it. Yeah. If you read it, you'll realize just how, heavy it is, like figuratively speaking, of course, it's got this really crazy premise. It's about a depressed housewife who suddenly decides to become a vegetarian. She swears

off of meat, right? Normal enough. Except the book is kind of centered around how different people react to that decision. People in her lives, her husband, her father, her brother-in-law, and they all react in very ugly but very human ways. So anger, disgust, repast. And

like, such a normal thing, right? You decide be, it's like your choice. But then she, it's about how she kind of deals with that backlash and how she kind of holds her own and fights for her

autonomy. And then she keeps amping it up. So she says, I want to be a vegetarian and I want to swear off meat. And then eventually she says, you know what? I'm going to stop food entirely. And then she decides that she wants to be a tree and live off of sunlight alone.

And it sounds, it's like, it's such a deep, disturbing book in many ways. But I would absolutely recommend it. Han Kang is actually known for her poetry as well. Vegetarian was her best-selling book. It's what really put her on the map internationally. But she is a poet. And when you read this book, you can really tell.

It's so clear in her prose. Yeah. It's absolutely brilliant. I would definitely recommend that book. And if any of you have read it, please write it. please write to me, tell me what you think. Oh, that's a beautiful recommendation. It's reminding me of that other book that I recommended.

I don't remember what was the theme that week. Remember Julia Tzuka? Yeah. Also, like, the prose is just like poetry. It's so beautiful. Amazing. Yeah. Again, Japanese writer, no?

Japanese American. So much brilliant literature comes out of South Asia. Correct. Which is also linked to your recommendation. Yeah. Actually, I think translators often they don't get enough importance, but literally translators are so such, they're doing God's work. Truly. You know, bringing all of this stuff to us that we would, this whole new world.

And there's so much context that's so important. Right? In each language, there's context that's really hard to translate. But a good translator who's able to do that, like it's incredible. Yeah. Like, I remember, so one of my favorite, again. short story. I love short story. So like I, Chekhov is one of my favorite writers. And there is this one particular, I forget his name. See, that is the thing. Like, translators are forgotten. But there's

this one particular translator who's one of the best, you know, translators of Chekhov's books. You know, so it's like that. Like, you know, people put their, these translators put their whole life in work. They study the culture. They know the language. You know, so much effort goes in. But, Yeah. It's a real art. It is. It really is. Yeah. So my recommendation is actually this Indian writer. He's a Maliali writer. And the book is called Legends of Khasak. And his name is Ovi Vijan and he's one of the most prominent figures in Malayalam writing, in modern Malayalam writing. And you know why I chose this book is because, you know, a lot of times when you read translations, for example, Marcus, when you read Gabriel Gauser, Marcus, like, 100 years of

solitude, you feel like, I wish I could read this in Spanish because even in English, it's, it's so beautiful, right? I wish I could read it in the original language. But here, Vigin has translated the book himself into English. That really happens. Yeah, yeah, exactly. So it's just so beautifully done. And I'll read out a passage quickly.

because I want to give you a sense of what it's like. But before that, I'll tell you. So the original title of the book is Khasakinte Itihasam. And, you know, it's set in this tiny little village in Kerala. You know, the book actually came out in the late 60s, if I'm not wrong. So just post-independence, Kerala. And it's about this young man called Ravi, who goes through this existential crisis, right? And he moves to this really tiny.

village in the middle of a forest and some back and beyond place as a school teacher. So there is no school also. So the town elder, the most important man in the, not town village, he gives him like the seedling granary to set up the school for all the little children. And you know, so how it's about how he's introduced to this place, which is almost like the way he's written it, it's almost like, is it real? Is it mythical? Oh, wow. So it's full of foreclores and magic and, you know, all kinds of stories and character. And there's so much inequality, like, through all the characters of the village, right?

Like, you see cast playing out, all of these things, but very, very subtle. Right. And it's also like, you know, the backdrop of communism and Kerala. That also comes into the story, right? And I really, I don't like to kind of draw this comparison, but it does remind me a lot of hundred years of solitude. It is quite a bit of magical realism, but not so much more than that, you know. So it's basically about how Ravi realizes that, you know, logic and rationality often don't

give you the answers to the questions that you're looking for. Love a little bit of existentialism. Yeah. Yeah. And it's so weird, you know, Rahil, because I had never been to Kerala when I read this book. I remember it was in Delhi. And it made me so nostalgic for this place that I've never been to. You know, it was so beautiful.

I'll quickly read out this passage, okay? All right, here goes. Ravi smiled upon his 22 children and they smiled back. The caliphs and queens until smiles filled the seedling house. This was the hour of myth. Ravi knew. Let's tell a story, he said. to the children. They were overjoyed. Ravi asked, what kind of a story? The children began

chirping all together and a 10-year-old in the front row raised her hand to tell him something. Her silver anklets chimed when she moved her feet under the desk and her wide gaze was hemmed by exuberant lashes darkened by Sourma. Yes, Ravi said. Sahr! Sahr! she said. And then grew shy. A story without dying, Sarr! Ravi laughed. What's your name, child? Kunhamina. Ravi listened to the ballad of Khassak in her. Its heroic periods, its torrential winds and its banyan breezes. There was no death, but only silver anklets and her eyes sparkling through the Surma. Ravi looked deep into those eyes. The story would have no dying. Only the slow and mysterious transit. He began in the style of the ancient

fabulous once upon a time. Wow. Isn't that so beautiful? You know what you said about how it made you nostalgic about a place that you've never even been to? I feel like a lot like translations of books in Malayalam has been that for me because I'm Malayali but I grew up everywhere but Kerala. So I feel like later in as I grew older when I was an adult and I kind of discovered Malayalam cinema and Malayalam literature is how I found

connection to the state and it's people and all of that and what you just read was so beautiful another I'm going to be cheeky and throw in another recommendation. Please, yes, please. Another author and I think she was one of the first like Maliali writers that I read

I read her translation of course I can't read Malialam her name is Kiar Nira and she's a contemporary writer. She wrote this book called Hang Woman. I think it won the Sahitia Academy a while ago. And the plot, spoiler, Snikda already knows this plot because I told her about it very excitedly. I'm trying to act surprise for our listeners.

But it's so wonderful. I'm going to go over it again. Yes, please. It's about a family from Kerala and they have a legacy of being executioner. So a generation after generation, they've produced hangmen. who've killed people, like who've executed people, right? And it's based on the youngest of that family. This woman named Chetna, she's in her early 20s,

and she's all set to become the first woman, so the first hang woman of India. Such a brilliant, brilliant plot. There's all this fanfare, you know, everyone wants to hear from her. She's part of her, in the middle, there's a reality show and all based on her. Wow.

And it's about how she kind of finds her own, how she stands up against a very domineering father, how she deals with like a very toxic lover, and how she then kind of plays that part, you know, almost like a performance. And it's incredible. She is such a brilliant writer and it's a wonderful translation. Her other books also, I think I've read one or two.

Really, really great. Definitely would recommend. Wow. That's amazing. Yeah. I'm definitely going to. Do you have it with you? I don't. But I buy a coffee. You should also buy a copy. Yeah, we should buy Indian writers. Buy books from bookstores. But okay, I'll also slip in another one. This is a very famous Nepali writer. And he's actually from the same town as me, Kershong. His name is Indra Bahadurai. And there are a lot of stories. He's very famous. He's very famous. He's very important. very popular

short story writer. Yeah. No, no. This one is a novel but he's written short stories as well. One is very popular. It's called Jhar.

And they've made a film into it also, a film out of it also. But this one is called In Nepali it's called Aja Ramaytacha. There is a carnival today. Wow.

And I won't give you to give too much away but it's about the sociopolitical background of Darjling. It's history. It's people. And, you know, with what's happening now, you must have heard about the whole Gorkaland movement, the demand for a separate state and all of that.

Like, you know, it really gives you an insight into this identity crisis that... There is so much that you can learn about states and their history from... Through fiction. From fiction. Truly. Yeah. Yeah. Yeah.

Incredible. Their politics, their people. It's truly incredible. Okay. Okay. And now on to our listeners' recommendations. We didn't get too many this week, but we did get two of the same book. Yeah. And it's a book that we both really enjoyed.

Gachar Ghochar by Vivek Shanba. It's originally in Canada and was translated to English by... Srinat Perur. Shrinat Peru. Brilliant book. Can you tell us what it's about, Snikpa? I read it a long time ago, but it's basically about this family who kind of comes into money through some kind of a grocery or...

masala business if I'm not wrong and how you know how money kind of changes every character in the family and the main protagonist is this you know slightly good for nothing kind of a guy and and his wife she's very troubled by the fact that he's not really doing anything in life it's it's a really good book for sure yeah and it's so short you remember it's very thin I finished it in like one day. And it's got a very, like a great cover. Yeah, great cover. Describe it.

It's this, it's this, like, it's just a saucer. Yeah. With this like coffee or tea stain. Yeah. It's very stark. Coffee. You know, because. You know, because it starts.

Yeah. He always goes there and sits. India coffee house. Yeah. And there's a bunch of ants kind of crawling all over it. And that's it. Like very, as minimalists, they come. But it's like very stark.

So yeah, great recommendations as usual. Thank you, guys. And that's a wrap. Yes, that's a wrap. See you next week. See you next week. With a new version. Yes.

Right? Yeah, but please write to us with tell us what is working about unwind, what is not working, how can we make it better? Because we literally just started this segment to be able to talk to you. Yeah. You know? Yeah. So, yeah. Looking forward to hearing from all of you.

Rahel, you want to tell our listeners the number? Yes, sure. Our number is 8971-08379. I'll say that again. 897W1 08379. We'll also put it in the show notes of this episode. Please reach out to us. Tell us what you think.

Tell us what you want us to talk about next. And keep coming back to listen to Debrake and mine. Yes. Bye-bye. Bye.