360 One Wam Limited (360ONE) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, and welcome to 360 ONE WAM'S Q4 and FY '25 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. On the call today, we have with us Mr. Karan Bhagat, MD and CEO; Mr. Yatin Shah, CEO 360 ONE Wealth; Mr. Anshuman Maheshwary, Chief Operating Officer; and Mr. Sanjay Wadhwa, Chief Financial Officer. I now hand it over to Sanjay to take this conference ahead.

Thank you, Anil, and a very good evening to everyone on the call today. Amidst a volatile capital market, particularly in the second half of the year, the growth in our client base continued to be very healthy. For this year, we have onboarded over 440 new clients with INR 10 crores plus wealth ARR AUM. Presently, we have 3,300-plus clients with total AUM of INR 10 crores plus who account for 95% of wealth AUM, excluding custody. Before we deep dive into financials, we would like to highlight that the Board has approved FY '26 first interim dividend of INR 6 per share. Coming to the business and financial numbers. In line with our focus on ARR assets, total ARR AUM increased to INR 246,828 crores, up 23% year-on-year. This growth was largely driven by strong net flows at INR 25,974 crores during the year as against INR 16,136 crores in FY '24. For the full year, Wealth ARR net flows stood at INR 22,334 crores, up 42% year-on-year, while AMC gross flows were at INR 16,300 crores. AMC AUM saw a marginal reduction on a Q-o-Q basis due to negative MTM and the impact was lesser than the broader market correction as a diversified asset base and strong gross flows were able to offset the decline. Our ARR revenues for the full year grew by 28.2% Y-o-Y at INR 1,701 crores, led by strong growth in assets across business segments. Our ARR revenue as a percentage of total revenues from operations stood at 70%. Total revenues are up 35% Y-o-Y at INR 2,652 crores for FY '25, also supported by higher other income. Total costs are up 27.3% Y-o-Y at INR 1,218 crores in FY '25. In line with our previous comments, the cost-to-income ratio improved to 45.9% as compared to 48.7% in FY '24. We expect gradual improvement in this metric over the coming quarters as the new business initiatives and teams become more productive. We are happy to report that the company recorded its highest ever annual PAT at INR 1,015 crores, an increase of 26.6% year-on-year. Tangible ROE is at 24.3% in FY '25 vis-a-vis 30.1% in FY '24. The ratio is expected to improve in the coming quarters as the investments made in our lending and alternate businesses in FY '25 begin to reflect in the earnings profile. With that, I would like to hand over to Anshuman to cover key business and strategic highlights.

Thanks, Sanjay, and good evening, everyone. At the outset, we are happy to report that the company's performance has successfully demonstrated our core tenets of growth, resiliency and agility in a challenging and volatile FY '25. Business years like FY '25, which are a unique combination of market highs and sharp corrections amid geopolitical uncertainty, not only test businesses but also help in strengthening our belief in the fundamentals of the business of wealth and asset management. For us, it has further reinforced our confidence in the disciplined approach towards client assets and the resilience of our recurring business model. The year also marked several milestones for 360 ONE as we complete our 17th year of operations. As a firm, we have always believed in defining sharp strategic focus areas, creating deep competitive moats and giving disproportionate attention to execution. Our culture of constant innovation and high performance encouraged us to take timely decisions on matters of team building, capital allocation and investment in platform and technology. Today, we are even better positioned to sustain the growth trends while scaling up to meet the requirements of varied client segments and drive new business engines. With that, I would like to share details regarding our recent strategic exclusive collaboration with UBS AG, one of the world's leading wealth managers. This collaboration brings together 2 visionary firms, powerhouses in the space of wealth management to create a platform that is truly without parallel. This exclusivity is guided by shared belief in values, ambition and a client-first philosophy. This historic collaboration has 3 interrelated components, i.e., business collaboration across geographies and business segments, UBS AG's stake in 360 ONE and integration of UBS India's Wealth Management business with 36O ONE WAM. Starting with the first, 36O ONE WAM and UBS AG have entered into an exclusive strategic collaboration where clients from both institutions will have access to their onshore and offshore wealth management solutions. Additionally, opportunities for deep cooperation in the segments of asset management and capital markets will also be tapped into. And to ensure a sharp focus on execution and the realization of the strategic opportunities, a joint apex committee with senior leadership from both UBS and 36O ONE has been formed. Secondly, UBS AG will subscribe to warrants, representing a stake of 4.95% in 36O ONE WAM at a price of INR 1,030 per warrant, a premium of about 14% to the 3-day VWAP as on the relevant date. This equity stake is an indication of UBS' commitment and trust not only in 36O ONE's core tenets but also in the India growth story. We will also integrate UBS AG's India Wealth Management business into 36O ONE Wealth, along with their highly capable bankers and other team members and a trusted legacy of excellence. The business includes distribution and broking, discretionary and nondiscretionary portfolio management as well as lending services, very similar to what we do today at 36O ONE WAM. This business transfer adds approximately INR 26,000 crores of active AUM and recurring non-lending revenues of INR 45 crores to INR 50 crores and will have a similar cost to income as our current wealth business. The net consideration being paid for this business transfer is INR 307 crores. This collaboration is expected to unveil newer opportunities for our teams as well as clients. UBS AG's global investment expertise, research and access will improve our ability to serve the cross-border needs of our clients and enhance our wealth management proposition significantly. Along with the recent B&K Securities acquisition, we are now even better positioned to grow our presence across broking, equity capital markets, merchant banking and the corporate treasury space, while fortifying our lead position in wealth and alternate asset management. As an update on B&K, the regulatory approvals are underway, and we hope to complete the transaction within this quarter. Specifically, the B&K business performance remains strong over the last quarter with operating revenues at about INR 65 crores to INR 70 crores and continued PAT of approximately INR 25 crores, bringing the full year PAT to INR 102 crores for B&K. We are also happy to announce that all requisite approvals regarding the ET Money acquisition were received in quarter 4, and the firm formally has become part of 36O ONE WAM. In our journey over the last 17 years towards becoming a full stack financial services player around segments of wealth management, public markets, including mutual funds, alternates, global business and capital markets, we have remained consistently focused on serving the client needs in the most comprehensive manner possible. Within Wealth, the focus remains on serving the UHNI, HNI and retail affluent with an advisory mindset. Equity broking and investment banking would be key drivers for the Capital Market segment. Over the last few years, we have been consolidating in a steadfast manner across business lines. And in the future, we aim to retain our leadership position in both wealth management and the alternate space while making significant strides in the Global and Capital Markets segment. I will take this opportunity to thank all our partners and stakeholders who have bestowed trust and confidence in us through our journey. With that, I would like to hand over to Karan and Yatin for the question and answers.

Thank you, Anshuman. The floor is now open. [Operator Instructions] First on line, we have Prayesh Jain.

Karan, congrats on the very good set of numbers as well as the transaction at UBS. Firstly, just on this UBS transaction, could you elaborate on what do you mean by exclusive arrangement, whether -- so when the domestic clients of yours get access to UBS Global, do you mean only UBS Global assets would be given to domestic clients? Or what do you mean by an exclusive arrangement, both sides? That would be my first question.

Thank you for the compliments. I think to answer your question on the UBS side, I think what an exclusive arrangement largely implies is, if we open for the clients, LRS money, which -- where the clients look at onboarding a global bank account, UBS will be our exclusive partner. And also, obviously, needless to say, in case we end up opening an external asset manager platform for our clients overseas, we would be using the services of UBS. Also, in addition, on the asset management side, it's not necessary that all our GIFT City feeders and so on and so forth need to be only with UBS Asset Management. As an asset manager, we will work on an open architecture basis. So as a wealth management client in India, we will obviously get them the best open architecture asset management products available across the globe. Needless to say, UBS also runs a lot of good products on the asset management side and some really nice exclusive ones. We will get our clients access to those also. And specifically, like we run discretionary mandates in India, UBS also runs global discretionary mandates, so we can get access to that also for our clients. On the other side, for UBS, all their referrals back into India for all their global NRI clients and clients who can potentially open NRE, NRI, NRO accounts into India would be exclusively referred to us. And while there is no specific tie-up on the asset management distribution, needless to say, basis -- performance basis credibility and diligence, hopefully, we can penetrate some of our own asset management products in the UBS distribution space.

Got that. So just an extension to that question, there is a 5% -- almost a 5% dilution in the equity. What -- against that, what could be the big revenue opportunity from this collaboration per se? Let's leave aside the INR 26,000 crore AUM that you are getting and for which you're paying a separate cash consideration. Just from this collaboration, what could be the revenue opportunity that could accrue over the next 2 to 3 years from this?

Revenue, I think it's -- I wouldn't say the revenue contribution has a one-on-one match with the INR 2,000 crores we are raising. I think there are a lot of potential synergies on the revenue side, some of which I kind of described. But I think there are 3 or 4 large synergies on the revenue side. One obviously is the inbound referrals. One is the outbound access to products. Third is the ability to capture our clients' dollar portfolio or the global wallet share. And fourth, obviously, is our own ability to kind of distribute our asset management products better. So I think these 4 -- 3 or 4 potential revenue opportunities exist. That necessarily doesn't have anything to do with the quantum of capital we are raising to give UBS AG a 4.95% stake. I think the opportunity is fairly large. I think it's too early for me to kind of quantify each of these in these 4 verticals. It's a collaboration. We are kind of -- we know for a fact that from a culture perspective, from an understanding perspective and, most importantly, from a client wallet share and platform perspective, it's extremely synergistic. Exactly what kind of -- in rupee terms, what kind of revenue it would be add is, I think, slightly early to kind of describe. Having said that, I think the primary use of capital for the amount of money we would end up raising is going to be a combination of 3 or 4 things. Needless to say, I think the -- out of the INR 2,000-odd crores, we'll end up -- though the INR 300 crores won't go as a part of that INR 2,000 crores. But obviously, I think on an overall pool basis, INR 300 crores, INR 350 crores will get utilized for that. I think we've obviously acquired B&K Capital. We'll end up using INR 250 crores, INR 300 crores of incremental margin there. The NBFC book has continued to see some good growth. We'll add around about INR 800 crores, INR 900 crores there on the -- out of the INR 2,000 crores. And the last INR 400 crores, INR 500 crores would kind of largely get used in the -- potentially as overall kind of addition to the alternatives business. So overall, I think the growth in revenue between -- from a collaboration perspective versus raising of capital are not exactly running parallel with each other but both have their own unique reasons to do so.

Got that. Just a bookkeeping question. You mentioned -- I think Anshuman mentioned that against INR 26,000 crore AUM, you just have about INR 50 crore revenue, which is a very low yield as compared to what you are making. And against that, you're saying that the cost to income is similar to what you are doing. So I'm just trying to build the math out there. It looks very absurd at such a low realization, you would have the same cost to income and why such low realizations?

No. So I think 2, 3 things there. I think the realization obviously is around about INR 70 crores, INR 75 crores of revenue, slightly higher. The realization we've considered INR 50 crores, INR 55 crores is obviously, there are certain elements of revenue, which would not accrue on our platform. And obviously, from a transfer of business perspective, it is only relevant parts of the business, which are transferred to us. It's not as if the entire business or the entire -- not all the people are transferred, only a part of the people are transferred. So the relevant cost -- and obviously, you have to adjust for a lot of the operating function costs, which don't need to be transferred. So the part of the Wealth business, which is getting kind of transferred to us, both from a revenue and cost perspective is largely representative of INR 50 crores, INR 55 crores of income and a very, very similar cost to income. I think the cost to income, the PBT broadly would be in the region of INR 20 crores, INR 25 crores. PAT would be in the region of INR 10 crores to INR 15 crores, which is largely resulting in that value of INR 300-odd crores.

Thank you. I request you to restrict yourself to 2 questions. You could combine your questions and ask them, and we'll come back in case we have more time. Next on line, we have Mohit Mangal.

First of all, congratulations, Karan, for being reelected as MD for the next 5 years.

Thank you.

Yes. So coming to this UBS acquisition, I'm a little curious about this INR 26,000-odd crores, if you can just break into ARR and non-ARR AUM. And I mean, if I look at last 2, 3 years, how the growth has been, say, for the UBS business?

So I think out of the INR 26,000 crores, I think the ARR revenues -- I remember the ARR revenue number. I don't remember the exact ARR AUM number, but I think it will be more or less reflective. But I think it's approximately a 30-70 kind of number or INR 25-75 kind of number. But let's not forget, I think the focus really is on the fact that these are really, really good relationship managers. It's a great platform. There are really 12 super senior guys. And it's -- I would be highly surprised if the yield of these assets continue to remain the same in our platform. I would be -- I would like to believe if our normalized yields are in the region of 75 to 80 basis points, somewhere between the existing yield of 25, 30 basis points to 80 basis points, we'll definitely be able to move these assets. Whether we are able to move the entire INR 26,000 crores into active assets or maybe 60%, 70% of that is something, which time will tell and, obviously, is a function of many things on how well we integrate and so on and so forth. But I would expect at least 60% of these assets to become yielding in a very, very similar format to what we have. So effectively, if I look at our yields today, we would have around about 75, 80 basis points on the ARR side and around about 30-odd basis points, 35 basis points on the TBR side. I think I would expect this AUM base to settle somewhere around 30%, 40% on the ARR side and 60% on the transaction side. So effectively leaving us with a blended yield of around about, give or take, 50, 55 basis points.

Understood. Now just continuing, I mean, say, last few years, we have done a few acquisitions like -- I mean, I remember L&T Finance, we had done. We had added around 20 -- 30 to 35 RMs. Here, what's the max basically in terms of RM addition and other things? I mean, if you can just elaborate on that.

For RMs, the exact RM count across different kind of vintages and so on and so forth, we have 10 senior RMs within the UBS system and maybe I had a couple of 3 or 4 junior RMs. So 13 to 14 RMs in that sense and another similar number of people on the service analyst and RM-facing side. So around about 30-odd people on the RM-facing side and another 10 to 15 people on the support to the business side.

Understood. My last question is on the flows. I think in the wealth management space in Q4, we had a kind of a muted quarter. So just wanted to know the reason for that. And how do we see financial year '26 in terms of net flows?

I think overall -- I think the wealth management business over the last 90-odd -- maybe last 120-odd days, I think overall gross flows have been okay. I think net flows numbers have also been quite decent. I think we lost around about 8 to 10 people across the country over the last 4, 5 months in terms of senior folks. And that led to approximately a net outflow of around about INR 2,300 crores, INR 2,400-odd crores across the system over the last 4 to 5 months on the ARR AUM side. So I think to a certain extent, the net flows are slightly dampened for the INR 2,500 crores of net outflows from the system. But overall, I think, from just pure transaction activity, there was a patch of maybe 15 days to a month in the quarter where activity levels were slightly lower. Obviously, it affected us lesser because we were able to kind of offset it with a lot of fair degree of activity on the fixed income side as well as a few real estate transactions. So I think overall, TBR kind of continued in a tight range, not as active as, let's say, quarter 4 of last year and quarter 1 of this year but it was reasonably active. Less active on equities but more active on yield plus kind of assets. And I think overall market share, I would say, remain the same but a little bit of impact on flows of INR 2,000 crores, INR 2,500 crores, INR 3,000 crores largely because of a combination of a little bit of attrition.

Understood. Any guidance for financial year '26 in terms of flows or profitability or something?

I don't want to give a headline guidance just for next year, but at a very philosophical level, I think we would like to add around about 12% to 15% AUM every year, at around about 8% to 10% on mark-to-market. So effectively grow the AUM by around about 20%, 25%, resulting in a 16% to 18% growth in revenues and a consequent 20%, 25% growth in profits. So I think that's our headline Mantra. I think we want to kind of be able to grow our AUM by 20%, 25%, resultant revenue growth of 15% to 20% and back again PAT growth of 20% to 25%.

Next in line, we have Nidhesh Jain.

Karan, first question is on sharp improvement in retention. I missed the opening remarks. But if you can share why our -- how our wealth management retentions have improved quarter-on-quarter basis to 80 basis points this quarter? And how should we think about retentions going forward?

No, there's not actually a massive improvement on a consistent basis on the wealth management retention. I think a little bit of improvement on retention is with a little bit of the advisory fee kind of stabilizing and the non-active AUM becoming active. But obviously, this quarter has a couple of carry items, both on the wealth management side as well as on the asset management side. So that has led to a little bit of improvement on the retention side. Second, obviously, the net interest margins in proportion just because we've raised capital last quarter, quarter 3 has added a little bit more to the overall ARR AUM. So therefore, those 2 things have kind of contributed a little towards the increase in retention. And a little bit, third, as I said, is a little bit of the carry contribution. So from a retention perspective, I think on a steady-state basis, I would still look at it at closer to the average of the Q1 to Q4 retentions as opposed to just looking at the Q4 retentions.

Sure. And secondly, how should we think about the return on equity because we have -- we did QIP and then there's more capital, which will come through, through this UBS transaction. So our ROE will dip quite sharply versus what we used to do in the past. How should we think about ROE trajectory going forward?

Well, that's always a challenge, I think -- but I'm kind of -- the opportunities are very, very large. I think, like Anshuman pointed out right at the beginning, I think we are going both wide and -- we are going wide and deep, wide obviously, in terms of kind of consolidating our position on the wealth and the alternate side. We're also going deep in terms of geographies and segments in terms of ultrahigh net worth, high net worth, skipping the affluent but then going to the mass affluent. And similarly, on the asset management side, we built a substantial business in alternates. And hopefully, we can -- and we built a very good business on the public equity side. Hopefully, we can kind of complement the public equities business and grow the mutual fund business larger also. And lastly, now with the entire UBS thing coming through, hopefully, we can kind of expand the global piece slightly sharper. And finally, with B&K Global, we've got the capital markets piece altogether. So I think all these 5 things are kind of coming together. It gives us a lot of width and a lot of breadth. And it may lead to maybe a complementary or an overlap of 6 to 9 months of higher capital by the time we end up using the current capital raise, we'll have the UBS money coming in subject to warrant conversion. So I think there are lots of opportunities out there. We'll have to keep our eyes and ears open. I think UBS added a lot of strategic value to the business and, therefore, we felt comfortable taking in that capital and building out that optionality. But at the very highest level, you're right. I think we need to kind of ensure that we are able to do substantial justice to the incremental capital to maintain our ROE around the 20% mark.

Sure. And last question is on the global business. We have shown a INR 50 crore drag. So now going forward, should we assume that will be cost saving?

Yes, that goes away. Yes, that's right.

Next in line, we have Aejas Lakhani.

Karan, congratulations on all the good news.

Thank you.

Karan, I have 3 questions pertaining to the overarching business model that the business is re-pivoting to. And those are across talent flow dynamics, revenue model recalibration and scale-up of the existing investments we have made. I'll just ask you all 3. So on the talent flow dynamics, I'm witnessing a notable shift wherein if you were to take, say, calendar year '23 and prior to that, we were the preferred destination for top talent. And if you see the last 2 years, we have now become a key hunting ground for competitors. So on that front, I'd like your thoughts. That's point -- question number one. Do you prefer that I ask you all questions?

Yes, I prefer if you ask all 3, I can answer it cumulatively.

That's the first one. Second is on the revenue model recalibration. Maybe 12, 14 quarters back, we discussed about the pivot we made from TBR to ARR. And interestingly, now we're seeing, again, some early signs of shift back towards TBR, particularly with BSE. So I just wanted to understand this model recalibration and your thoughts from a build-out perspective. And third is that on the scale-up of the mid-market and the global piece. Global, of course, you have addressed it in the last comment. But could you provide an update on how the mid-market piece has been scaling up? Specifically, has your ramp-up met internal timelines and expectations post the earlier delays? And are you seeing any operational roadblocks that remain for the scale up?

Great, Aejas. Thanks for all those questions. So I actually love your first question. The good news is you can't be a hunting ground for talent until you don't have good talent. And the other thing, obviously, is the fact that, hopefully, while we are a hunting ground for good talent, we should hopefully continue to remain a platform, which continues to attract good talent. I think as long as the second one is good to go, I think a little bit of churn would happen. Having said that, I think, overall, I think the way to look at talent is, obviously, I think we've lost a few people over the last 10 to 12 months. And I think as long as it's within a range, I think we are fairly comfortable. I wouldn't say it's ideal. It's obviously a little bit of a stop and go. Even if you're running a marathon and you're the fastest, if you have to stop and go a little bit, you go a little slower. So we are obviously -- whenever we lose talent, it's not a great thing. But at the same point of time, people have aspirations and sometimes cultures don't match. But overall, I think we are in a good place, happy in both the locations where we've had a little bit of change. I think we've been able to attract some great talent. So sometimes challenges lead to opportunities. And the good news is, in both places, I think we are very, very well covered both in terms of relationship managers and in terms of number of employees, and number of senior partners whom we are able to attract as well as our existing -- we have a very, very strong existing force of people on both the investment and the sales side. So I would say it's nothing. It's not the -- so even losing a single person is not the ideal state of things. But at the same point of time, it's part of doing business, and it's a little bit of stop and go. But I think we are kind of largely beyond it right now. And we've kind of consolidated our position with most of these clients and continue to add wallet share from them. On the TBR/ARR side, there's no real model shift at all, okay? I think we continue to be super, super focused on ARR. And when I think of -- and I'm going to say this without any context of any projections or guidances and so on and so forth. So please don't take my -- take the numbers I'm giving you as guidance. But the reality is today, as a business, we would be doing around about INR 2,700 crores, INR 2,750 crores of revenue and around about, give or take, INR 1,000 crores of profit after tax. Now ideally speaking, we have to build the right canvas Excel model to move this INR 1,000 crores of PAT to around about INR 2,100 crores, INR 2,200 crores, let's say, 2.2x in a reasonable time period. Now the reasonable time period could be 3 years, 4 years, 5 years, it could be -- and beyond a point, none of us have a crystal gauge to get that absolutely right. But some time period between that. And when I look at that revenue mix of, let's say -- and to get to that profit number, you obviously need to do INR 5,000 crores to INR 5,500 crores of revenue. And when I look at it forward and see how the INR 2,700 crores is going to grow to INR 5,000 crores, INR 5,000 crores of revenue, 3 things come to my mind, right? So I think the first thing, which comes to my mind is, ideally speaking, we would need at least 75% to 80% of that number to come in through ARR revenues. So -- and I would love to maintain that mix of at least 75% coming from ARR revenues. So obviously, I think if you were to convert the INR 5,000 crores of revenue into 75% or 80%, which is INR 3,750 crores to INR 4,000 crores, and you need to -- assuming you are in a broad basis of 65 -- 70-odd basis points of ARR retention. We need to grow our current INR 260,000 crores, INR 270,000 crores of ARR AUM to around about INR 500,000 crores, INR 550,000 crores in that time period to get there. Second, obviously, other income potentially can add INR 200 crores, INR 250 crores, but then you need another INR 1,000 crores to come in from the TBR side. And I think when you look at INR 1,000 crores of TBR relative to the current TBR of INR 600 crores, INR 650 crores, there are lots of areas of improvement. The first area of improvement, obviously, is out of the current INR 600 crores of TBR, we've got only INR 75 crores of equity brokerage. I think that's a big potential area for us. If I look at all our competing private banks, for them equity brokerage would be a substantially more relevant portion of their revenue. So out of our INR 2,700 crores today, it's less than 2.5%, 3%. Should we be close to around about 8% to 10%, the answer is yes. So I think getting a great research firm like B&K not only adds that INR 200 crores, INR 250 crores of equity brokerage, which they get, but also increases our potential of increasing our INR 70 crores of equity brokerage to our set of clients to at least maybe 2 or 3x that amount over a period of time. So if I look at the INR 1,000 crores of TBR, I think we need a good, good equity platform to get there. Along with that, obviously, the unlisted equity piece, the fixed income trading piece and, obviously, a little bit of merchant banking. All of that would put together would aggregate to INR 800 crores to INR 1,000 crores. And even then that would be less than 20% of our overall revenue piece. So there's no real pivot. Having said that, we need that -- we need to build a very stable TBR. And within the TBR itself, obviously, there are different qualities and different cyclicalities. So even within the TBR, our effort is to try and ensure that the quality of TBR is the best. And while we maintain TBR of 20%, 25% of the overall business, yet we need to kind of grow it to ensure that it's at the right number over a 3- to 4-year time period. Lastly, coming to your question of mid-market and global, I think, they don't -- I wouldn't call them operational difficulties. But at the same point of time, I think mid-market, I think, took a slightly longer time from an organization structure perspective, which I've kind of mentioned before. But now really, it's down to execution at feet-on-street, so we've seen some AUM started to come. I think the revenues will kind of follow. We've now got a good team of 45, 50 relationship managers on the high net worth side. So that goes on stream as we speak. It's pretty much on stream already. I think our first 5 or 6 B2B presentations we made last month, all have kind of come back with a good response. And I think that's something which will kind of find its feet for sure this year. On the global side, I think the collaboration agreements will take a little bit longer. The regulatory approval itself will take 3 to 4 months to come. So by the time it goes on stream, I think it's at least -- it's definitely third quarter of the current year. But there are no real operational challenges. We are very well licensed in every jurisdiction for us to be able to start business everywhere. We've got offices everywhere, which are kind of engaged in asset management distribution for us in any case, and that's kind of given us the license in every jurisdiction. So in some senses, I wouldn't call it anything -- there's no operational kind of obstacle. It's really up to us to kind of do better execution on the mid-market side. And on the global side, it's really about kind of accelerating the regulatory approvals within the possible time constraints and ensuring that we get the collaboration agreements in place as fast as possible.

Got it. Thanks for that measured answer. I just have one follow-up, if I may.

Okay. So let's -- maybe I'll answer with the next question but I'll take the question.

Sure. So just one thing. See, you had earlier, again many calls back, alluded to when an RM leaves, typically, they walk away with 1/3 of the AUM, 1/3 is a cohort of clients who say, okay, [Foreign Language], we'll see how you progress and 1/3 typically stays on with the manager himself. So is that -- has that changed in lieu of the recent senior management exits? And also on the UBS bit, how does the revenue collaboration work?

Next, I invite Sanketh Godha to kindly ask your question.

So first is the data keeping question. So just wanted to understand how much ET Money contributed to the AUM top line and profit in the current year after the integration? And I just wanted to understand how was the growth in that platform as AUM growth? So that's my first question. And the second question, I think you answered partially but I just wanted to understand again that the discretionary PMS, which saw the bps of retention of almost 100 basis points compared to typical 40 basis points is largely because of the carry what got recognized in the current quarter, right? And if this carry is not there in future years or immediate quarters, then it is going to claw back to the same 40 basis points is the right understanding on the discretionary PMS side? And lastly, on global aspiration, so we had a team. Now team is not there. So with UBS thing, is it fair to assume that your international base will be more UBS linked compared to building your own team to build the global aspiration in a way. Just want to understand a little more on that side, whether UBS will take over that entire global aspiration journey, which we had. Those are my questions.

I'll just get Anshuman...

Absolutely. So on the ET Money, I'm happy to just clarify the numbers. So on the AUM side, about INR 33,000 crores of AUM has been added on the TBR AUM side. And on the ARR side, about INR 1,750-odd crores has come in, and this has obviously been reflected and been called up in the investor deck as well. The revenues from ET Money, just to note, ET Money has about 8 weeks revenue and cost have gotten captured for this particular quarter. So the revenues is about at INR 6-odd crores, and there is a INR 1 crore loss for this 2-month period.

And if I do it stand-alone full year basis, what would be the number, though you have not integrated that, but from a full year basis point of view, what's the run rate on profit and revenue?

The loss will be around about INR 6 crores to INR 7 crores. Anshu, yes, why don't you go for it?

Yes. I mean, obviously, just 2 months translates at a INR 1 crore loss translates to about INR 6 crores to INR 7 crores. But I think for the full year, if we look at their actual financial numbers, it will be about INR 10 crores to INR 12 crores, so it will be higher than that for ET Money.

Okay. Perfect. And revenue, if you can call out, say, 2 months, it's INR 6 crores, then for full year, it is?

Revenue will largely be on track. I think it won't be exactly -- it will be about INR 50-odd crores, INR 50 crores to INR 52 crores would be the revenues.

Okay. Okay. Perfect. And on the yield part or retention part with respect to discretionary PMS, which I asked?

I think you're right. I think the discretionary PMS on the separately managed accounts would go back to the same numbers. But having said that, there are at least 3 or 4 mandates in which we get a profit share. So the best is to look at the annualized yield as opposed to look at the quarterly yield. It's not as if it will disappear next year but it will disappear next quarter.

Okay. So from a full year point of view, you're confident that the same yield will be reported probably?

Yes, around the same yield will be reported next year also, yes.

Got it. And on the global thing?

No, global, you're right. I think from a global wealth management aspiration perspective, as I said earlier, it's an exclusive collaboration with UBS. So we are hoping to work together with them and have the right SPOCs in India to be able to expand our global aspirations with them.

Next in line, we have Dipanjan.

So just a few questions from my side. For the fourth quarter, if you can give some color on the breakup of the transactional revenue, I just wanted to get some sense of the ex-broking businesses, how they are holding up and some color on how you really see that, let's say, for the next few quarters given the market volatility? Second, coming back to the question on OpEx. Now owing to this UBS venture and strategic initiative, do you see any sort of costs that you would deploy to kind of get the ball rolling out there maybe for the next 12 to 18 months, especially on the joint venture rather than the business that is getting acquired? And lastly, on the ESOP expense side, it seems that for the last 2 quarters, it has been a little bit higher than the historical levels. So how should one think of the overall variable cost or maybe the ESOP cost going ahead?

Sorry, Dipanjan, just remind me what was the first question?

Yes. The first question was on the transactional revenue in terms of...

Yes, yes I got it. I remember. Yes, no problem. No, I think on the -- I'll just give you a very quick color on the transaction revenue on quarter 4. I think it's a very interesting mix actually. I think, one, obviously, I think our equity brokerage numbers hold up quite well. So that INR 70 crores, INR 75 crores was around about INR 18 crores, INR 20 crores for the quarter. If I just look at pure equity listed brokerage, add another INR 2 crores, INR 3 crores, INR 4 crores for commodities. So around about 15-odd percent of the TBR number was that. Then we had 1/3 coming from yield plus kind of transactions, so effectively REITs and InvITs and stuff like that, 1/3 coming from the unlisted side and another 1/3 coming from real estate. So I think overall, it was more of fixed income. For the first quarter, we saw 50% coming out of fixed income and 50% coming out of equity. Traditionally, compared to other quarters, I think unlisted was a substantially large portion. I think just given the way the client appetite is and even the kind of transactions, which are available for us today and the kind of momentum on both -- on all asset classes, I think, it's fair to say, I think going forward, it would -- I think it will become 1/3 of equity brokerage for us this year, 1/3 of unlisted and 1/3 of yield plus kind of transactions. And the yield plus transaction, I'm using kind of slightly broadly to include everything REITs, InvITs, commercial assets and so on and so forth. So I think that's going to be the broad nature of TBR. I think potentially over the next 12 months after that, we might have some other flows coming in from merchant banking and stuff like that. But for the next year, I think, 1/3 of equities, 1/3 of unlisted and 1/3 of yield plus transactions, including debt will really represent the color of the TBR. And coming down to the -- sorry.

No, no. Please go ahead. I mean, on the OpEx part.

Yes. Coming to OpEx, really no significant OpEx because of the UBS integration at all. I think we've got a couple of our really smart people kind of working through the transaction. I think some of the senior leadership, including me, Anshuman will be part of the Collaboration Committee to ensure that -- along with the senior leadership from the UBS side to ensure that we can get the coordination and the collaboration going on as fast as possible. And the 2 senior folks and 3 senior folks are pretty much running it from the Strategy office. So they would kind of continue as one of their key roles into this function. And along with the finance team, who is also involved in the coordination efforts. So I think overall, it doesn't really lead to any significant OpEx. Our international offices continue to function as small offices for the asset management distribution side. And we've got 1 person in Canada, 1 person in the U.S., 2 -- 3 folks in Dubai and around about 600 people in Singapore. So that continues. That doesn't see any change. And lastly, I think on the ESOP cost, you're right. We've done -- we've taken approval last March, Anshuman, I think, last...

January '24.

Last January, and we launched this program for employees called Golden ESOPs, which broadly accounted to around about, I think, if I'm not wrong, 75 lakh, 80 lakh shares over a period of 4 to 6 years of vesting. So that kind of -- that cost has kicked in over the last -- especially in the last 9 months of this financial year. And like all ESOP plans, a large part of that cost gets accounted for in the first year itself. So in the first year itself, I think around about 25% to 35% of the cost comes in, which is really represented by the higher ESOP cost. I think for the next 2 years, it's fair to say the ESOP cost will be at similar levels, not phenomenally different, maybe 10% lower. But -- and then the year after that, a further 10% lower because -- simply because there's a certain quantum of upfronting of the ESOP costs. Yes, so I think that covers your 3 questions.

Next in line, we have Harish Subramanian.

I wanted to understand a couple of things on the UBS AG inbound. Would there be any referral fees or any revenue sharing with UBS AG for their global clients getting referred to you? Or would it be like what you would acquire a typical ultra-HNI client?

No, I think the collaboration agreement, by definition, will have referral fees flowing both sides. So I think there will be both outbound referral fees for us and similarly, when UBS refers the clients to us. But it's still early days. I think on a principal basis, we have a very broad agreement on all of these things. We've still not gone down to kind of constructing the collaboration agreements on a case-to-case basis. We have broadly identified the 13, 14 collaboration areas, which we are going to work on. And I think between both the teams, we spent enough time to know that there's a good significant opportunity on all of these 13, 14 points. In terms of defining exact commercials between these, it's -- we've kind of set that out as a part of the Collaboration Committee to kind of work on that and get it done.

Okay. Got it. Another one, broadly in the industry per se, inbound, so what's the kind of industry opportunity? If you have some numbers in terms of inbound wealth management numbers.

Inbound wealth management is very, very large. I think today, if I just look at our own NRI book would be in excess of $2 billion already without us really kind of having an NRI sourcing office at all, right? So I think the inward bound market is very, very large, especially for things like private market, it's alternates. The only money, which has come until now is really on the listed equity side and mutual fund side. With all the awareness on GIFT City and everything else, I think it's a very, very large opportunity. I think I really don't have any exact numbers but can our $2 billion become 3x the number if we get that right? I think, it won't be a big surprise. So I think that's -- the inbound opportunity is very large. The outbound opportunity, obviously, is kind of limited in its own way by whatever is possible regulatorily. But there also, we've seen a good movement happening on the GIFT City. And the LRS money also, which has been going out for the last 5, 10 years for the first 3, 4 years, largely went into education and medical and so on and so forth. For the last 4, 5 years is kind of finding its way into a financial asset portfolio. So I think put together, I think it's a reasonable size. I think -- but the challenge and the heart of it is in the execution and having the right platform to be able to implement it.

Next in line, we have Abhijeet Sakhare. Abhijeet, kindly go ahead and ask your question. I invite Akash Vora to kindly a question.

Congrats, Karan sir, for a great set of numbers. So firstly, I would like to understand on the collaboration agreement. So within that agreement, do we also have a noncompete sign with UBS, wherein UBS won't, in the future, come and compete in the same set of business that we have go ahead with asset management in India or something like that? And my second question would be in terms of the -- on the alternate side in the asset management business. So are more or less the bigger outflows done this year? Or do we expect more outflows and redemptions in the coming year as well? If you could give a hang of the number.

No, sir, I think the collaboration agreement obviously has specific noncompete clauses, which are reasonable time period noncompete clauses. I wouldn't want to go into specific details of each noncompete clause but they're very reasonable on both sides. So obviously, for whatever service UBS is providing us and similarly, whatever service we are providing to UBS. And the noncompetes are fairly commercial and fairly limited from a time period point but they are there. From a perspective of redemptions, I think the larger redemptions obviously are only there in normal course now. The last year obviously expressed itself in a big way in terms of a single item of redemption because the SOF series, which was 1 to 7, was raised on a specific period of time. And all of it kind of came up for redemption together. So we raised around about INR 7,000 crores. I think we have returned around about INR 16,00 crores, INR 17,000 crores, of which INR 7,500 crores, INR 8,000 crores got return this year itself -- or INR 7,000 crores got returned this year. So I think that fund is more or less returned fully. I think it's got a very small amount of, if I'm not wrong, sub around about INR 1,000-odd crores remaining to return. So we don't have any block redemptions through this year or even in the coming years. The block redemptions are largely now over. Now obviously, we've got funds, which we raised every year. And every year, we'll raise some funds and, every year, some funds will come for redemption. So it's going to be a natural cycle now.

Understood. If you could just highlight what kind of AMC flows on the alternate side you would expect in the next 2 years?

I think, we've not kind of really -- we've not kind of segmented our thought process exactly between alternates and public markets. But overall, I think, we would like a net flow number, as I said earlier, of around about 10% to 12% of our opening AUM. So our opening AUM is around about INR 270,000 crores. So around about INR 27,000 crores to INR 30,000 crores is the overall AUM we would want. I think it's fair to say approximately 65-odd percent, 60%, 65% of that on the wealth management side and around about 35% of that on the asset management side.

That's all we have time for this evening. Thank you all of you for joining us. We look forward to hosting you again. Thank you.