The surge in IPOs has become a critical wealth generation mechanism for UHNIs, with strategic stake-sales and IPO exits contributing substantially to their portfolios. Ultra-HNIs have allocated around a third of their portfolio to stocks, mutual funds and portfolio management schemes.

Indian stock exchanges have witnessed an extraordinary surge in IPO activity. India’s share of the global IPO market jumped from 17 per cent in 2023 to 30 per cent in 2024, with the National Stock Exchange (NSE) facilitating 90 main board and 178 SME platform listings totalling to 268 IPOs recorded in 2024 — the highest global volume.

This IPO boom has become a critical wealth generation mechanism, with 61 per cent of Ultra-HNIs citing “Profits from Business” as their primary source of wealth. Jitendra Gohil from Kotak Alternate Asset Managers noted, “The IPO market reflects strong investor confidence and provides strategic exit opportunities for business owners.”

Investment patterns demonstrate a sophisticated approach to wealth management. Equities dominate the investment landscape, with Ultra-HNIs allocating 32 per cent of their portfolio to stocks, mutual funds and portfolio management schemes. Real estate follows closely at 29 per cent, with a preference for commercial properties (45 per cent) over residential real estate (33 per cent).

Alternative investments are gaining momentum. Gold remains a favoured asset, with 69 per cent of Ultra-HNIs holding bullion investments, driven by geopolitical tensions and record-high prices. Digital assets are also emerging, with 20 per cent of Ultra-HNIs now holding virtual digital assets including cryptocurrencies and NFTs.

The global investment trend shows 29 per cent of Ultra-HNIs now investing internationally, primarily targeting markets in the US and the UK. “Ultra-HNIs are becoming global citizens while maintaining core economic interests in India,” said Gautami Gavankar, President of Banking Solutions at Kotak Mahindra Bank.

Migration trends reflect a strategic approach to global mobility. One in five Ultra-HNIs are considering migration, but 78 per cent plan to retain Indian citizenship while establishing secondary residences abroad. The US, the UK and European countries emerge as preferred destinations.

Regulatory constraints significantly limit capital movement. Current regulations restrict individual remittances to $250,000 annually, with non-resident Indians able to repatriate up to $1 million per year, effectively preventing wholesale capital exodus.

The Ultra-HNI population is poised for significant growth, projected to increase from 2.83 lakh in 2024 to 4.3 lakh by 2028. This expansion indicates a robust wealth creation trajectory, underpinned by India’s strong economic fundamentals and demographic dividend. “The modern Ultra-HNI is not just preserving wealth but actively creating value through strategic, globally-informed investments,” Gavankar summarized.

“As India’s economic landscape evolves, our report reveals how Ultra-HNIs are diversifying their portfolios and embracing both domestic and global assets, setting the stage for a significant rise in their spending by 2028,” said Oisharya Das, CEO - Kotak Private Banking, Kotak Mahindra Bank.

The survey, covering 150 Ultra-HNIs across 12 cities in India, now in its 20th edition, the Top of the Pyramid (TOP) Report offers an in-depth analysis of the investment strategies, spending habits, and ambitions of India’s wealthiest individuals. It further explores their growing presence as global investors, highlighting their affinity for luxury assets and the influence of emerging digital trends. The survey was commissioned to Ernst & Young LLP (EY).

Related Topics