Category: Excerpts

Hat Tip: Amit Mantri

Hat Tip: Aditya Shrimankar

“I almost despise the business of executive search because I find that they really want to sell you the best that’s available even if he’s no damn good and I don’t like that.

But the best single expense that Berkshire ever had as we paid an executive recruiting firm to find Ajit Jain to come in our little tiny insurance operation.

He doesn’t have any experience with insurance at all. He was an honors graduate of the main technical institute in India. He was a very smart man. He came in and create (our reinsurance business).

And that’s the only big business we created from scratch and Ajit created the whole damn thing.

And of course, he talked with Warren every night. And so, it’s like father and son. This is a very Confucian company and that was unbelievable.

So, we hired an executive recruiter and he brings us an Indian with no experience at all in insurance.

He talks to the old man every night, and it’s now by far the biggest reinsurance business in the world. That’s been a gold mine. There’s at least 60 billion dollars in Berkshire of net worth that Ajit has created that we would not have credit without him.”

–said Charile Munger

Source: Indian Hotels Annual Report 2016-17

Source: Edelweiss Conference Call Transcripts Q4FY17

See, the good thing about both Asset Management and Wealth Management is that there is an organic growth because the assets also appreciate. So the average if you see, a 10% to 12% asset appreciation in both Asset Management, Wealth Management is there for everybody.

And then there are fresh assets coming in. So to give you an idea, our estimate is that the current assets under advise for the whole Wealth Management industry is close to about Rs.700,000 crores odd business, Rs. 700,000 crores to Rs. 800,000 crores, which is close to about $120 billion to $130 billion in India.

If you look at most of the other countries which have gone through this development phase, I think our long-term idea is that it ends up being
somewhere between 40% to 50% of our GDP.

So, to give you idea, you are supposed to be 50% of GDP even now, it should be $1.2 trillion, which is currently of only $120 billion.

So,we do think that as GDP grows, like to give you an idea, US assets under advice of Wealth Management industry is 85% to 90% of the GDP, we are expecting in India it should be between 40% to 50% on GDP over the next eight to ten years.

So, we do expect that not only it will grow with the GDP growth but also the percentage of GDP will grow from currently what we think is only about 5% of GDP to at least 40% of GDP over 10 to 15 years, I do not think this will happen overnight. And given that, when you do the math, I think expecting a 30% growth of this industry over the next five, seven years, we do think it is possible.