Private markets are emerging as the next profit driver for JM Financial: Vishal Kampani

JM Financial has undergone a major restructuring in the past year, with asset management and private markets likely to emerge as growth drivers. Vice Chairman and Managing Director Vishal Kampani tells Rozebud Gonsalves and Sangita Mehta that private markets could surpass capital markets in terms of profitability in the next two to three years. He says the IPO story will slow down if secondary markets perform better and IPOs don’t trade well. Edited excerpts: JM Financial has restructured its operations over the past year. What are the new focus areas?

We have four core businesses: capital markets and business advisory, wealth and asset management, private markets and home loans. Asset and asset management remains the most important area of ​​focus for us. We have appointed 1,000 salespeople across our asset management business with a focus on scaling these businesses.Can you guide us through the new organizational structure?
Capital markets and business advice are our traditional activities, built up over the past 52 years. It includes advice on mergers and acquisitions, corporate restructuring, equity capital markets, institutional equities and research. We are among the top two to three players in most of these products. In second place is wealth and asset management, which also includes retail share trading, distribution of financial products, wealth advice, investment funds, portfolio management and AIFs (alternative investment funds). Next comes private markets, a new area of ​​focus that includes private companies, structured credit, private equity and distressed assets. For this segment we use our NBFC capital, private equity platform, ARC expertise and family office network. Finally, we have the affordable housing loan segment, which is growing at 30% annually. We expect similar growth in the future. Strict credit checks keep risk low.

Which of the segments will be the growth drivers?

Private market companies have the potential to become some of our largest companies. In terms of profitability, this will beat our capital markets business over the next two to three years. Private markets are huge globally, and India is catching up. We start talking to companies five years before the IPO, not twelve to eighteen months before. This company combines origination, credit syndication and equity investments. We have allocated ₹6,000 crore to private markets, which is the largest allocation among all companies. Our IPO pipeline stands at ₹1.2 lakh crore, and private equity exits will boost the capital markets.

Can you explain the private market model in more detail?
Here we undertake promoter level financing, provide private equity, fund startups and support institutional investors. We invest ₹50-500 crore in companies valued at less than ₹3,000 crore and syndicate the rest. We use our NBFC balance sheet, private equity funds and family office network to invest in the company. The flywheel is fantastic: private markets fuel the capital markets. We invest early, provide credit, then pre-IPO financing and ultimately take companies public. At any point in time, the company (which it finances) complies with JM credits, equity, pre-IPO, IPO, M&A. It is a complete product flow under one umbrella. By working together with experts we avoid implementation risks. How do you assess the IPO price given that half of the IPOs issued in FY26 are trading below the issue price?
IPO pricing is an art, driven by supply and demand. There is no science that can price an IPO. It is very behavioral and driven by supply and demand. In every major IPO boom, 30-40% of companies don’t earn their valuation by volume, but they go public out of frenzy. Domestic mutual funds are disciplined, but some IPOs have been overpriced. Success should not be judged by listing profit lock-up periods and secondary market trends matter. If secondary markets perform better and IPOs do not trade well, the IPO story will slow down. If returns remain mediocre, IPO volumes will decline.

In the past you’ve talked about debt relief. What is your strategy?
Previously we held assets on our books, increasing debt-equity to 3.5-4.0x. Now we limit it to 1x and syndicate excess exposure. This reduces risk and generates fee income. We currently do not take any execution risks ourselves. We always work together for distressed assets.

What about home loans? How do you manage the risks in the independent segments?
We focus on affordable housing with strict credit controls: by city, sector and ownership verification. We do not accept projects under construction. The LTV (loan-to-value) is limited to 45-50%. The default rate is 50 to 100 basis points (basis points), much lower than the perceived risk. Affordable housing is still an emerging industry. Urbanization trends and demand for first homes will remain strong over the next 30 to 40 years.

How is the NBFC business faring and is there any impact after RBI reduces arbitrage between banks and NBFCs?
Our NBFC is not for retail lending. It is exclusively a liquidity provider for private markets: wholesale lending, credit syndications and structured solutions. NBFCs have restrictions such as a ban on land financing, but we have adapted. The recent RBI moves allowing domestic banks to finance acquisitions is a big positive for us. Previously, this company went offshore. We can now conclude M&A financing mandates locally rather than offshore.

What is the outlook for the stock markets? When do you expect FIIs to reallocate funds to invest in India?
India is seen as a hedge against global growth engines such as AI and defense. But we need to take action in these sectors to maintain investor interest. Investors are looking at whether India can build capabilities in AI and defense. Otherwise, they will prefer supply chains in other countries. If growth does not pick up and geopolitics remains tense, there will be more FPI (foreign portfolio investors) selling. Valuations need a deep correction before foreign investors can return.