Detailed Rationale

Crisil Ratings has reaffirmed its rating on the commercial paper programme (IPO financing) of 360 ONE WAM Limited (360 ONE WAM; erstwhile IIFL Wealth Management Ltd) at ‘Crisil A1+'.

 

Crisil Ratings has taken note of the proposed agreements and transactions entered into by 360 ONE WAM, as announced to the stock exchanges on April 22, 2025. 360 ONE WAM has entered into (a) exclusive strategic collaboration with UBS AG for wealth management functions; (b) securities subscription agreement for issue of 2,05,02,939 warrants on a preferential issue basis to UBS AG at a price of Rs. 1,030.00/- (Rupees One Thousand and Thirty only) per warrant aggregating to Rs. 2111.80 crore and 4.95% stake in 360 ONE WAM upon conversion; (c) Business Transfer Agreement between 360 ONE Distribution Services Limited, a wholly owned subsidiary of the Company, Credit Suisse Securities (India) Private Limited (CCS India) and UBS AG for the acquisition of entire business undertaking of stock broking services and distribution business of CSS India; (d) Business Transfer Agreement between 360 ONE Portfolio Managers Limited, a wholly owned subsidiary of the Company, CCS India and UBS AG for the acquisition of entire business undertaking of discretionary and non-discretionary portfolio management services business of CSS; and (e) Transfer and Assignment Agreement between 360 ONE Prime Limited, a wholly owned subsidiary of the Company, UBS Finance India Private Limited and UBS AG for the acquisition of the entire loan portfolio of wealth management clients of UBS Finance.

 

The schemes have received approval from the board of directors and now await various regulatory and statutory approvals. The total deal consideration includes Rs. 307 crore, to be paid via cash for the acquisition of the stock broking services and distribution business; discretionary and non-discretionary portfolio management services business. In addition, loan portfolio of wealth management clients of UBS Finance will be acquired for a cash consideration equivalent to the value of the client loan book as of one business day prior to the Completion Date of the acquisition.

 

The proposed collaboration and acquisition will support 360 ONE group in increasing its value proposition to its domestic clients. UBS AG has a strong presence in the global wealth management space, and the wealth management offerings of UBS AG will help 360 ONE group strengthen its position both in the domestic as well as overseas market. In addition, 360 ONE group will have access to the global clientele of UBS AG looking for onshore investment opportunities in India. The companies will also explore potential synergies and opportunities to grow in the asset management and investment banking space, and will set up an Apex committee comprising of senior officials from both the organisations for the same. Furthermore, the acquisition of the India wealth business of UBS AG affiliates will help the 360 group broaden its customer base and further the strategic collaboration with UBS AG. Overall, the proposed collaboration agreement and acquisition of businesses is expected to support 360 ONE group in offering a wider and deeper product bouquet and thereby enhance its stronghold in the capital market space. The capital raise done by the 360 group through the preferential issue of warrants to UBS AG will help strengthen the capital position of the group.

 

Nevertheless, given that the scale of India wealth business for UBS AG is much smaller as compared to that of 360 ONE WAM, the contribution of the acquired businesses in 360 ONE WAM’s earnings is not substantial as of now and hence the proposed acquisition will not have an impact on the credit rating profile of 360 ONE WAM. Crisil Ratings will, nevertheless, monitor the progress on the announced acquisition and thereafter the integration of systems and teams, and the ability to rope in the synergies.

 

The ratings continue to factor in the stable and experienced management, strong market position and comfortable capitalisation 360 ONE WAM. These strengths are partially offset by the limited diversity in lending operations and exposure to regulatory risk.

Analytical Approach

Crisil Ratings has consolidated the business and financial risk profiles of 360 ONE WAM and its subsidiaries, including 360 ONE Prime Ltd (rated ‘Crisil AA/Stable/Crisil A1+’). This is because, these entities are collectively referred to as 360 ONE group, and have significant operational, financial, and managerial integration. Additionally, they share a common brand - ‘360 ONE.

 

Please refer Annexure - List of a Consolidated, which captures the list of entities considered and their analytical treatment of consolidation

Key Rating Drivers & Detailed Description

Strengths:

Strong market position in the wealth management business

360 ONE group is one of India’s largest non-bank wealth management payers. Its wealth business’s closing total asset under management (AUM) grew by 40% during fiscal 2024 and 26% during fiscal 2025 and reached Rs 4.97 lakh crore as on March 31, 2025 (Rs 3.95 lakh crore as on March 31, 2024). The closing ARR assets (annual recurring revenue assets) were Rs 1.62 lakh crore as on March 31, 2025 (Rs 1.28 lakh crore as on March 31, 2024). 360 ONE group caters to premium wealth clients, and offers a full suite of services, including distribution, advisory, asset management, broking, and lending. While currently wealth management business is targeting UHNI segment, going forward, the management aims at increasing its reach to HNIs i.e. the mid-market segment and also focus global business.

 

360 ONE group’s asset management AUM grew by 24% during fiscal 2024 and 17% during fiscal 2025, to reach Rs 0.84 lakh crore as on March 31, 2025 (Rs 0.72 lakh crore as on March 31, 2024). The asset management business houses the alternative investment funds (AIFs) business, discretionary portfolio management services and Mutual funds. While other two are still in growth stage, 360 ONE group has a leadership position in the AIFs business in India with AUM of Rs 0.42 lakh crore as on March 31, 2025 (Rs 0.38 lakh crore as on March 31, 2024). In AIF business, private equity, listed equities, private credit, Infra and RE are key strategies, and this business segment is expected to be the key driver to 360 ONE group’s growth in the AMC business.

 

Experienced and stable management

The management is well experienced with a track record of over a decade in the wealth management domain. Mr Karan Bhagat (Managing Director and Chief Executive Officer) and Mr Yatin Shah (Executive Director) were instrumental in setting up the business in 2008. Both acquired the promoter status, after IIFL Group entities were demerged in May 2019. The company retains its market leading position on the back of innovative wealth products and adoption of global best practices.

 

Comfortable capitalisation; supported by presence of marquee institutional investors

Capitalisation is comfortable, with consolidated networth of Rs 7,065 crore and gearing of 1.6 times as on March 31, 2025 (Rs 3,450 crore and 2.7 times, respectively, as on March 31, 2024). Transition of revenue model from a distribution-based to advisory-focused model has lowered the capital requirement for business growth. The company uses capital primarily to support the NBFC business, sponsor-commitment in AIFs, and to cover operating expenses in the interim.

 

It has raised funds from external investors in the past, including Rs 750 crore in fiscal 2019 from General Atlantic, Steadview Capital, HDFC Life and others, and Rs 2250 crore in the current fiscal which saw participation from The Regents of The University Of California, Manulife Pacific Asia Equity Fund, ICICI MF and Kotak MF. This ability to raise capital, along with healthy internal accruals, support capital position.

 

The wholly owned subsidiary, 360 ONE Prime Limited had a networth of Rs 2,874 crore and gearing of 2.9 times as on March 31, 2025 (Rs 1,439 crore and 4.5 times, respectively, as on March 31, 2024). Parent supports subsidiary’s capital position and has infused Rs 1200 crore in current fiscal (earlier infused Rs 500 crore in fiscal 2019 and Rs 962 crore in fiscal 2016).

 

Weakness:

Exposure to regulatory risk in the wealth management business

Unlike lending operations, wealth management is largely a fee-based business, due to which any credit event has a relatively lower impact on the capital base. However, the wealth and asset management businesses operate in a highly regulated environment, and any unanticipated changes can adversely impact the business model. In the last few years, regulations that prohibited upfront commissions and reduced in mutual fund total expense ratios, led to a sharp erosion in commission income. Profitability of many players, including 360 ONE WAM, suffered as they adapted to the new environment by modifying their respective business models. The overall retention rate on average annual recurring revenue earning assets was 0.73% for FY25, against 0.76% for FY24 and 0.82% in FY23.

 

Proactive transition to an advisory platform (360 ONE Plus) and recognition of revenue on trail-basis, lends stability to the top-line. Further, focus towards mid-market and global business in wealth management is expected to support retention levels. Client’s adoption of 360 ONE Plus and any regulatory change that potentially impacts the business, will remain key monitorables.

 

Low diversity of lending operations

360 ONE Prime, which commenced operations in fiscal 2016, provides LAS to client of 360 ONE WAM. In general, size of the book is strongly correlated to ebbs and flows of the capital and money market, and are affected by both domestic and international events. AUM stood at Rs 8,397 crore as on March 31, 2025, as compared with Rs 6,369 crore as on March 31, 2024. The loan portfolio primarily comprised of loans against securities (LAS) at 84% share, with loan against property (LAP) forming the rest 16% share.

 

Gross stage 3 assets remain nil as on March 31, 2025 (same as on March 31, 2024). Nevertheless, asset quality remains vulnerable to the vagaries of capital markets.

Liquidity: Strong

Liquidity for all the 360 ONE WAM subsidiaries is managed at a consolidated level. The group had cash and cash equivalents amounting to Rs 673 crore and liquid investment and unutilised bank lines of Rs. 1461 crore as on March 31, 2025. Against this the company has a total debt of Rs. 3386 crore (excluding CBLO borrowings of Rs. 2120 cr) maturing over the next three months till June 2025. Furthermore, the group continues to tap debt capital markets for fresh issuances. 360 ONE Prime’s asset liability maturity statement as on March 31, 2025, had positive cumulative mismatches in all buckets.

 

Environment, Social, and Governance (ESG) Profile

Crisil Ratings believes that 360 ONE WAM’s ESG profile supports its already strong credit risk profile.

 

The ESG profile of financial institutions typically factors in governance as a key differentiator. However, wealth management is primarily a fee-based business, with limited impact on social parameters. Also, the business does not directly impact the environment adversely.

 

Key ESG highlights:

• 360 ONE WAM has decided to source its energy from renewable sources in order to reduce its emission. It has entered into an arrangement with TATA Power for procurement of green energy
• 360 ONE WAM took various energy efficiency initiatives such as installation of capacitors and thin film transistor (TFT), migrating to LED lights, automatic shutdown of idle monitors, and restricted access to printers
• Women comprised 29% of the total workforce. In the board, one member out of eight members, is women. The board has a diverse mix of promoter - non promoter, executive - non executive, Indian - foreigner, young and experienced board members.
• Out of 8 board members, 4 are independent directors. Further, the company has split within chairman and executive positions. Additionally, the company has mechanisms for redressal of investor grievances and extensive disclosures.

 

There is growing importance of ESG among investors and lenders. 360 ONE WAM’s commitment to ESG will play a key role in enhancing stakeholder confidence, given substantial share of foreign investors as well as access to domestic capital markets.

Rating Sensitivity Factors

Downward factors

• Dilution in risk management practices, straining the asset quality (gross stage 3 assets being >2% sustained basis)
• Significant deterioration in AUM with high attrition among clients and relationship managers
• Adverse impact of regulations, constraining the business risk profile significantly

About the Company

In fiscal 2009, the 360 ONE group started its wealth management services under the ‘IIFL Wealth’ brand and got licences for insurance broking and venture capital. 360 ONE WAM, along with its wholly owned subsidiaries, is primarily engaged in distribution, advisory, asset management, broking, and lending solutions for clients in the wealth management segment.

 

In January 2018, IIFL Finance Ltd (IIFL Finance; earlier IIFL Holdings Ltd) announced plans to reorganise its corporate structure and list the three entities – IIFL Finance (loans and mortgages business), IIFL Wealth (wealth and asset management business), and IIFL Securities (capital markets and other businesses). In May 2019, as part of this restructuring scheme, IIFL Wealth and IIFL Securities were demerged from IIFL Finance. Further, in September 2019, IIFL Wealth Management was listed on the stock exchanges, followed by a name change to 360 ONE WAM Limited’ in January 2023. 

 

Change in the revenue recognition model to trail basis across distribution, AIF and portfolio management services impacted profitability. Margin was also affected by the company’s plans to transition to an advisory model from the distributor fee model, though the move aimed at reducing volatility associated with distribution fees.

 

In fiscal 2025, reported profit after tax (PAT) was Rs 1,015 crore on total income of Rs 2,652 crore as against Rs 804 crore and Rs 1,965 crore, respectively reported in the previous fiscal.

Any other information: Not Applicable