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Global Asset Management Industry 4

Present and future industry size and growth

•The global asset management industry showed encouraging signs of
recovery in 2009, a trend that is expected to continue in 2010 -
McKinsey
•The industry is anticipated to reach US$129.2 trillion by 2015,
driven largely by favourable macroeconomic factors and
transforming demographic trends - Global Industry Analysts Inc.
(GIA)
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Global Asset Management Industry 4
Regional Analysis
•In 2009, on average assets under management increased 11% in North
America, 12% in Europe, 7% in Japan and Australia, 25% in the rest of Asia
and 22% in Latin America
•The United States and Europe dominate the global asset management
market with about 74% share of the total assets under management (AuM)
 Rising life expectancy rates and falling birth rates are contributing to the
growing proportion of elderly in the overall population, which further puts
strain on conventional pension insurance schemes
 Global economic crisis has significantly affected the asset management
industry, even among investment categories that were once regarded as
low-risk and safe
 Contracting assets under management and reduced revenues affected
performance fees and management fees, thereby affecting the overall
profitability of the asset management industry
•India and China have emerged as the favoured destinations for domestic and
international asset managers due to large untapped potential of the markets.
 Rising income levels and the substantial rise in the number of high-
income individuals, an aging population, and rising inflation are
accelerating the demand for assets management in these countries
•In 2009, AuM in emerging markets grew stronger than those in developed
markets due to stunning inflow levels of between 8 and 10 percent. In
contrast, inflow in developed markets have been growing by between 0 and 2
percent - McKinsey
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Global Asset Management Industry 4
Key Players
•AXA Group, Blackrock Inc., BNP Paribas, BNY Mellon Asset
Management, Crйdit Agricole SA, Credit Suisse Group AG, Deutsche
Bank AG, Fidelity Investments Ltd, HSBC Holdings Plc, JPMorgan
Chase, Legg Mason Inc, Merrill Lynch & Co., Inc, Natixis SA, Northern
Trust Corporation, State Street Global Advisors, The Capital Group
Companies Inc, The Goldman Sachs Group Inc, The Vanguard Group
Inc, and UBS AG.

Source
1. http://newslife.us/economy/Global-Asset-Management-Market-to-Reach-US-129-2-Trillion-by-2015-According-to-New-Report-by-Global-Industry-Analysts-
Inc/
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Global Asset Management Industry
Key Asset Classes 4
•Since reaching a nadir of
just under $9 trillion in
March 2009, total mutual
fund assets have
rebounded to reach over
$10.5 trillion by Mid-2010.
•Flows into long-term
mutual funds have been
strong, led primarily by
flows into fixed income
funds.
•Equity fund flows have
remained positive due to
continued demand for
emerging market funds
•H1 2010 witnessed the
value of funds managed by
hedge fund managers
crossing $1.5 trillion due to
improved economic
conditions.
Source
1. http://newslife.us/economy/Global-Asset-Management-Market-to-Reach-US-129-2-Trillion-by-2015-According-to-New-Report-by-Global-Industry-Analysts-
Inc/
• Under Construction….
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Global Asset Management Industry 3
Asset Under Management, 2005-2010E 2008 2013
Retirement Assets: 7.9% annual growth to
Five-Year View: Opportunities $17.1 trillion
Abound

•Retail markets continue to provide the most

attractive prospects for growth
•Advisory platforms represents greatest mutual fund
net flows
Retail Assets: 9.2% annual growth to $11.7
•Explosion in alternatives, EFTs (including active trillion
EFTs)

Other Assets: 7.9% annual growth to $17.1

trillion
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PE Investment - India 3
70-75

• PE deals value crossed the deals value in the entire

2009 - According to data compiled by deal space research
firm VCCEdge, the first seven months of 2010 have seen
private equity deals valued at $5.1 billion, as compared to
$4.3 billion in entire 2009.

Sources:
1.http://www.indusadvisory.com/Indian_VCPE_Report_2009.pdf
2.http://www.bain.com/bainweb/publications/brief_detail.asp?id=28119&menu_url=briefs.asp
3.http://www.vccircle.com/500/news/india-may-see-75b-pe-investments-in-2010-15-idg-ventures-study
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PE Investment - India
• India is poised to attract higher VC/PE investments 3
than China - The private equity and venture capital industry
is likely to witness estimated investments worth $70-75 billion
in 2010-2015 with existing growth rates. However, with
proactive encouragement and incentives from the
government, a $100-billion investment target is possible
during this period, according to the data released by IDG
Ventures India.
• Expected sectors of focus - As per the sector-wise
forecasts, IT & ITES, manufacturing, healthcare and
engineering & construction will witness $30-billion plus
investment in 2010-2015.

Sources:
1.http://www.indusadvisory.com/Indian_VCPE_Report_2009.pdf
2.http://www.bain.com/bainweb/publications/brief_detail.asp?id=28119&menu_url=briefs.asp
3.http://www.vccircle.com/500/news/india-may-see-75b-pe-investments-in-2010-15-idg-ventures-study
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PE Investment - India
• Major sectors of investment (2004 3
-08) – During 2004-08, majority of PE
investment focused on technology-led
capital intensive sectors.
• Major sectors of investment (2009)
– In addition to technology companies,
PE investors have focused on the real
estate sector as well. A trend that
continued in 2010 – VCCEdge and Bain
Consulting
• Top deals of the year
• Olympus Capital's $300 million
investment in Tata Power
• Xander Real Estate Partners
$110 million investment in
Panchshil Realty

Sources:
1.http://www.indusadvisory.com/Indian_VCPE_Report_2009.pdf
2.http://www.bain.com/bainweb/publications/brief_detail.asp?id=28119&menu_url=briefs.asp
3.http://www.vccircle.com/500/news/india-may-see-75b-pe-investments-in-2010-15-idg-ventures-study
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Private Equity - Indian Real Estate
• Rising PE investment in Indian real estate sector - 2
According to Anuj Puri, Chairman & Country Head, Jones Lang
Lasalle, Private equity investors, on their part, are definitely
interested in investing in India’s real estate sector. In the first
half of 2010 alone, India Inc saw over 150 major deals – and,
significantly, a little over 10% of these were in relation to the
real estate sector
• PE fund preferring residential sector - Currently, the
proportion is heavily skewed towards residential. This can be
attributed to the fact that the residential sector is correctly
seen as a self-liquidating asset class, while commercial and
retail real estate have exit-related concerns due to
unavailability of REIT/REMF vehicles in India
• Changed priorities of PE funds - PE investors expect
returns between 20-25%, post tax. These expectations are
almost the same as what they were before the downturn –
however, the structure has changed, as private equity funds
are now focusing more on capital protection. In other words,
they seek lower risk even if that means slightly lower returns
Sources:
1.http://www.joneslanglasalleblog.com/realestatecompass/real-estate/2010/11/private-equity-indian-real-
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Private Equity - Indian Real Estate 2
• New PE funds in the real estate sector - Some new
private equity funds have recently entered the Indian real
estate arena – among them Aditya Birla and ASK.
• PE funds are being directed to Tier 2 cities - It first
seemed as though a majority of the PE funds in the system
were being directed into the primary cities – namely Mumbai
and Delhi NCR. However, it emerges that not a few private
equity funds have also chosen to invest into large residential
projects in Tier 2 cities, since they perceive that the demand
for residential spaces in those cities is heavy enough to justify
quick absorption.

Sources:
1.http://www.joneslanglasalleblog.com/realestatecompass/real-estate/2010/11/private-equity-indian-real-