Amruda Nair, joint managing director and chief executive officer of the hotel chain Aiana Hotels and Resorts, was around 21 years old when she first went to Europe to study at CHN University, now known as Stenden University, in Holland.
For the granddaughter of C P Krishnan Nair, founder of The Leela Group, the experience was new but much-awaited. Her sister, Aishwarya, two years younger than Amruda, went to Cambridge for high school when she was just 16, and it was just a matter of time before Amruda joined her in Europe in 2004.
Moreover, most of her friends and acquaintances went to study abroad. “Everything from the food to the language was a fun, learning experience for me. My favourite part was riding my bike to school even through rain and snow,” said the 32-year-old daughter of the chairman of The Leela Group, Vivek Nair.
Two years later, in 2006, when she moved to Cornell School of Hotel Administration in New York for her master’s degree, it was “like coming full circle for my family” as both her parents had studied there and she had grown up hearing stories about it.
Going abroad for higher studies has been popular among ultra-high-net-worth individuals (UHNIs) since colonial times. But the trend has caught on at a much faster pace in the past few decades owing to globalization and the resulting growth in the number of UHNIs, which includes not just inheritors, but entrepreneurs and professionals as well.
According to the Kotak Wealth Management’s report, Top of the Pyramid, the number of high net worth households (HNHs) grew to 137,100 in FY15 from around 117,000 last year, a growth of 17 per cent over one year and a 22 per cent compounded growth over five years. The emergence of a larger pool of HNIs has increased the number of educational aspirants.
“We expect the number of ultra HNHs to increase to 348,000 by FY20, driven by new HNHs from emerging sectors such as e-commerce and new avenues for high-return investments,” the report stated.
For established business families, it is, of course, a natural progression, like in Nair’s case. “Globalisation has created opportunities for Indians to do business outside India which requires promoter family members to have adequate exposure to business opportunities and understanding of the challenges abroad,” said Kavil Ramachandran, executive director, Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business (ISB).
An increasing number of first-generation entrepreneurs are joining this burgeoning pool, so are professionals holding global positions. And this set is seeing the merit in sending their children abroad, be it the experience they get, networks they develop, skill sets they acquire, or a step-up they are looking for in terms of social mobility.
“There is a whole set of entrepreneurs who may have gone to IITs (Indian Institutes of Technology) themselves, but want to send their children to MIT (Massachusetts Institute of Technology). In that sense, the spike is due to a combination of social mobility and abilities,” said Murali Balaraman, partner, advisory services, EY, which collaborated with Kotak Wealth for the above-mentioned report.
Then, there is a clear attitudinal and generational shift. “A lot of children are helping expose parents to the changing landscape of education and the opportunities it can provide,” said Balaraman.
Professionals, on the other hand, see it as a means of enrichment. For Narayan Hariharan, senior vice-president, Jet Airways (India) Ltd, whose parents migrated from Kerala to Mumbai in the 1940s, education is the only inheritance. “A great premium is placed on ensuring academic excellence in our society,” said Hariharan, 58, who is pursuing a doctoral degree in Buddhist studies from Mumbai University.
As per a recent Value of Education survey that HSBC conducted, 88 per cent of all Indian parents want to send their children overseas for higher education. “This trend is not limited to HNIs; even middle-class parents are keen to do so,” said S Ramakrishnan, head retail banking and wealth management, HSBC India.
The world is their oyster
The benefits are quite apparent. There is enormous exposure not just in terms of quality education, new skill sets, emerging trends and technology, but also in terms of adapting to new cultures and languages.
Nair believes her work experience during her internships abroad played a big role in exposing her to international practices. “I have recently set up a joint venture to start a global hotel management company in Qatar and I am certain that the early exposure I had while living abroad and working with multicultural groups gave me the adaptive qualities I need to function efficiently,” she said.
Hariharan’s elder daughter, Sowmya, completed her law degree from Pune – ILS Law College – and went on to do her Master’s from the National University of Singapore. She now works for a law firm in India.
“International exposure with top legal firms and business houses helped my daughter understand how business is done in South-East Asia. The cultural context of dealing with different groups helped build values of working with a multi-cultural workforce,” said Hariharan.
Coming into their own
A majority of UHNI children return to join their family businesses. For instance, Kumar Mangalam Birla, who pursued his MBA from London Business School, took over as chairman of the Aditya Birla Group in 1995 at the age of 28 after the sudden death of his father, Aditya Birla.
According to the Kotak Wealth report, to cater to specific needs of children of global entrepreneurs and inheritors, many global business schools have started tailor-made programmes for running family-managed businesses.
“It primarily depends on their family background. Those from business families normally return to join the families. Children of HNI professionals tend to be entrepreneurs or professionals,” said ISB’s Ramachandran.
But there is no set rule. While many still join the family business, others prefer to start their own venture. The varied exposure gives them the opportunity to pursue careers of their choice.
Rahul Anand, who went to Harvard Business School, chose to set up his start-up hopscotch.com after working for six years in his family business, Skanan Hardware Pvt. Ltd.
Rishabh Mariwala, son of Marico Ltd founder Harsh Mariwala, started his independent soap-making venture, Soap Opera N More, five years ago. He graduated from Frank G Zarb School of Business, Hofstra University, New York.
Nair and her siblings chose their educational institutes in keeping with their academic interests. Her brother, Aushim, chose to go to Les Roches International School of Hotel Management in Switzerland, while her sister, Aishwarya, completed a four-year food degree at The Culinary Institute of America. She is now a food and beverage consultant. Nair worked as a hotel consultant in Singapore and then joined the family business, before she set up Aiana Hotels.
(with inputs from Vivina
Vishwanathan; HT Media)