Founders Return to Launch Lakshya AMC

The Securities and Exchange Board of India (SEBI) has approved Lakshya Asset Management Company (AMC) to begin operations. This launch marks the return of a seasoned team that pioneered India's exchange-traded fund (ETF) segment. The venture aims to tap into a significant opportunity within India's expanding financial services sector. Backed by Wealth First Portfolio Managers, Lakshya AMC will operate from Ahmedabad, signaling a strategic move to capture untapped market potential.

Opportunity in India's Passive Fund Market

Lakshya AMC's key strength is its leadership team: Sanjiv Shah, Rajan Mehta, and Sanjay Gaitonde. This trio previously founded Benchmark Asset Management Company, introducing India's first ETFs like Nifty BeES and Gold BeES over 20 years ago. Their experience is vital because India's mutual fund industry, managing over ₹81 lakh crore in assets as of January 2026, still has limited adoption of passive strategies. Passive funds currently make up about 19% of total industry assets, which is lower than in developed markets and represents a significant growth area. The ETF market alone is valued at over ₹8.38 lakh crore as of March 2025. Lakshya AMC plans to leverage this trend, meeting investor demand for cost-effective and transparent investment options.

Strategic Backing and Ahmedabad Base

Wealth First Portfolio Managers, a publicly listed firm with a market capitalization of ₹922 crore and a P/E ratio of 38.66, backs Lakshya AMC, offering a strong financial and reputational base. Lakshya AMC is also establishing its headquarters in Ahmedabad, a departure from the usual financial industry concentration in major cities. Ahmedabad is emerging as a significant financial hub with strong growth in equity assets and investor participation. This unconventional location could lead to lower operational costs and access to a unique talent pool, while benefiting from Gujarat's entrepreneurial spirit.

Competitive Landscape and Economic Tailwinds

India's asset management sector is competitive, with established players like HDFC AMC (P/E 33.75x) and Nippon India Asset Management (P/E 38.27x) already active. SEBI continues to encourage passive investment, creating an environment for new entrants. Goldman Sachs Asset Management sees India as a key diversification opportunity, citing projected GDP growth of 6-7%, favorable demographics, and increasing digitization. These economic strengths support new companies looking to gain market share.

Risks and Valuation Concerns

The projected growth in India's asset management sector faces significant valuation and regulatory risks. Major AMCs like ICICI Prudential AMC, HDFC AMC, and Nippon Life trade at high P/E ratios, ranging from about 35x to 44x, making them vulnerable to market corrections if growth slows. Wealth First Portfolio Managers, the sponsor, also has a high P/E of 38.66, compared to the peer median of 26.48x.

Furthermore, new SEBI regulations effective April 1, 2026, will impose stricter transparency and cost-efficiency rules. These changes could affect AMC revenue models, particularly for lower-margin passive products. SEBI is also reviewing rules that restrict AMC business activities, which might lead to a more challenging operating environment. The industry's profitability often relies more on higher-margin active equity funds than passive or debt instruments. The past sale of Benchmark AMC to Goldman Sachs in 2011 for approximately 4.5% of assets highlights the importance of scale and strategic positioning for long-term success.

Looking Ahead

Lakshya AMC plans to release more details about its product offerings and launch schedule soon. The company's strategy, built on the founding team's expertise in passive investing, is designed to benefit from the ongoing shift toward lower-cost, transparent investment options in India. The overall market sentiment for India's economy and its financial services sector remains positive, driven by increased retail investor participation and regulatory developments focused on market efficiency and investor protection.