By Fakir Hassen, IANS,
Johannesburg : If it can manage to get just half a percent of the $2 trillion held as savings in banks by Indian investors, its new joint venture with Indian share broker SMC will be profitable by 2015, South African insurance giant Sanlam Investments chief executive Johan van der Merwe said here.
Van der Merwe was commenting on the granting of a licence to Sanlam Investments to start a portfolio management company in India with SMC, the third largest share broker in India. SMC is a distributor of financial products for about 50 other companies.
The joint venture will see a wellness- and a portfolio management company being established.
According to Van der Merwe, the establishment of the wellness management company is already well advanced. The first management meeting has already been held and seven offices should be operational by the end of the year.
Van der Merwe said the granting of the licence will allow the partners to start marketing unit trusts by January 2009.
Because unit trusts are still relatively new to Indian investors, Sanlam would have to embark on a huge awareness drive to show investors that there were alternatives to the traditional savings mechanisms in India. The company will also initially offer only basic unit trust products.
Van der Merwe said the Indian market was extremely competitive, with companies from various countries wanting to cash in on the tremendous opportunities for savings products in India, despite a few having scrapped their plans and retreated. Sanlam, however, had persevered and taken two years to find the right partner for a joint venture in India.
Indians were extremely conscious of the importance of saving, but invested mainly in cash and gold, Van der Merwe told the Afrikaans weekly Rapport, adding that the savings ratio in India was 30 percent. Only about 5 percent of Indian savings were in unit trusts, while at least $2 trillion was in cash deposits at banks.
The Sanlam Group, mother body of Sanlam Investments, already markets insurance products in India through a joint venture with Shriram. Van der Merwe said he was confident that the two Sanlam joint ventures would be able to take advantage of synergies.