Kfin Technologies Limited (NSE: KFINTECH) Q3 2025 Earnings Call dated Jan. 24, 2025
Corporate Participants:
Sreekanth Nadella — Managing Director and Chief Executive Officer
Vivek Narayan Mathur — Chief Financial Officer
Analysts:
Devesh Agarwal — Analyst
Abhijeet Sakhare — Analyst
Supratim Datta — Analyst
Madhukar Ladha — Analyst
Shrija Pathak — Analyst
Pranuj Shah — Analyst
Uday Pai — Analyst
Dipanjan Ghosh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to K Fintech Q3 FY ’25 Earnings Conference Call hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assessions during the conference call, please signal an operator by pressing the star then zero on a touchtone phone.
I now hand the conference over to Mr. Divesh Agarwal from IIFL Capital Services Limited. Thank you, and over to you, sir.
Devesh Agarwal — Analyst
Thank you. Thank you,. Good morning, everyone, and welcome to the Q3 FY ’25 earnings call of Kayfin Technologies Limited. Today from the company, we have with us Mr. Srikan Nadilla, MD and CEO; Mr. Vivek, CFO; and Mr. Amit Muralka, Head of Global Business Finance, M&A and Investor Relations.
I would now like to hand over the call to Mr. Srikan for his opening remarks, which will be followed by a Q&A session. Thank you, and over to you.
Sreekanth Nadella — Managing Director and Chief Executive Officer
Thank you so very much. Very good morning, very welcome to one at all. This is the first-call of the new year, so wishing all the participants a very Happy New Year as well.
I couldn’t be more thrilled to be able to announce our Q3 results which continue to express the outcomes that we intend to deliver, which is a broad-based expansion of our businesses, profitable businesses and ones which are sustainable. Our strategy for the last five years had been one that of diversifying risk whilst using that opportunity to expand our addressable market, which is in some sense on three access, X access is increasing various different business services, not just RTA, but of an accountant, our data and a technology leadership roles, CRM, mobility solutions, cloud solutions, what have you.
Second is to expand into every asset class in the asset management industry, mutual funds, alternatives, DMS, pensions, private retirement schemes, bond markets, what have you. Third, a geographical expansion and not just a single-country, we will always have cyclicalities in a single-asset class in a single-country and hence, our intent had been to look the onboarders. And since then, we had been one of the few market — further marketing who have gone beyond borders.
Financially, the numbers are out there in the market. So you would have seen it. Our revenue grew about 33% year-on-year and same as the case with EBITDA and PAT number is roughly about 35%. We are satisfied with the results in the context of the mark-to-market gains being substantively low in the previous quarter and continues to be so. Mutual funds continues to be our dominant business even as the other legs of businesses have been growing far faster and we continue to track to the trajectory of getting the non-mutual fund businesses to be near about 50-odd percent over the next three to five-year horizon.
Our overall AUM also in terms of market-share has grown as against a market expansion of 39.4%, we have grown about 42.8%. That’s a good 300 basis-points expansion in the overall AUM on a year-on-year basis. Same is the case on a sequential basis with certain amount of expansion. But beyond what is more of a performance of our clients. Our definitive performance largely in terms of winning additional contracts.
Q3 had been a pretty consistent one — consistent one for us. We won two large data data-led contracts in the asset management space that takes the total count to about eight and this is a line of service, which we are very, very keen to. It gives us, one, an opportunity to serve clients and generate direct revenue. And just as importantly, all of that expands their own revenue in the form of formidable analytics that they use to grow their expansion business and hence kind of comes back to us as additional revenue eventually as well. We have had a terrific quarter in the corporate registry business. We have added close to 366 clients in the last quarter.
In the nine months of this year, that’s roughly about 1,000 odd new client contracts we have added. The total full-year count has expanded by about 8 million. You would have seen fintech rendering I close to several large ones. In fact, probably every large IPO or the largest five IPOs in the country have been handled by us whether it was Hyundai or Housing Finance and NTPC Green, what have you, we slapped several large ones in the pipeline and probably the next largest one that’s going to go public would be LG and others. So that expansion as well as the solutions we have created in our corporate actions and corporate events meant that revenue continues to along at a healthy 24% plus on a sequential — sorry, on a year-on-year basis and driving about 20% CAGR over the past three to four years.
Moving along, international business is something that we’re all excited and I do recognize that Swayu to a next end. Our client base has increased to 70 even as the contract base has expanded to 90. In the quarter that had gone by, we have signed two full-service tier deals from a large asset management company and a trust and these are based out of Philippines. We have also signed a large — another large deal in Malaysia and we have received two letters of intents which are being in the process of being converted into letter of awards in into the coming weeks from a significant size in Malaysia and another asset manager in Malaysia again.
Our share — market-share in Malaysia at this moment-in-time surpasses over 50% in terms of total AMCs there. And as I’ve said in the previous quarter, the deals that we are — we have been signing off-late are materially larger in size as compared to the erstwhile ones and that is truly a symptom of a maturing and maturing business as well as the confidence that a particular country’s ecosystem from a capital market standpoint gains in an administrator who does not necessarily belong to that country. And that level of confidence now is being exhibited in the countries of Philippines and in Thailand as well. Alternatives, another area of focus for us. As I mentioned, this is one of the three axes.
The second one was the asset classes. Today, we manage about 535 funds, getting our market-share closer to 37% in terms of the number of funds. The AUM growth had been substantive at about close to 55% year-on-year, bringing our total assets under management to over $1.4 trillion. We have been winning a more than 60% plus in domestic market and about three-fourths of the funds in the City and we continue to be probably the only player in the country who have a proprietary fit-for-purpose platform, a fully-integrated transfer agency and fund administration together, providing multi-currency, multi-asset and multi-geography solutions and that probably explains the win rate not just in India in GIP City and Beyond Borders as well.
Continuing on the line of the asset classes, national pension system, a very important asset as well. I recognize the fact that it was not a substantive number in the overall scheme of things in the P&L, but I continue to maintain that over a period of time, this would be one of those businesses which could be providing a significant hedge against market movements, one because of the stickiness too because of nonlinear relation to-market movements.
Very excited to tell you that we have grown three times faster than the industry average industry has grown at about 12%, we’ve grown about 35%. And this quarter also marks the breakeven in this line-of-business, which means into the coming quarters as the number of pensioners expand. And this particular quarter is always going to be the best quarter, the January, Feb-March for pensions. So we are excited in terms of what we can do in this space beyond what was done. So in a limited period of four years, we moved from 0% market-share to now close to 10% market-share, which was otherwise formulated pretty much in a scenario prior to entering into the market.
I’ll quickly move and cover a little bit at a individual business line level now. Future funds are clearly the largest of our assets, largest of our business continue to perform very well in a year which probably is hard to replicate every year. I think overall industry has seen a tangible growth in this year, nearly about 35-odd percent. And we have been growing slightly ahead of the industry with marginal gains in-market share. Overall AUM has moved to now about 32.4%, hopefully in time to come to get to one-third and then expand from there on. And that is largely a combination of clearly our existing clients growing and the new client addition and our contribution directly to help our clients grow in the form of technological solutions and the other value-added solutions we’re able to provide at extremely compelling cost propositions.
Our SIP book continues to be robust, close to 40% market-share in that particular you know business transaction type. And I continue to maintain that SIP market-share will be a good indicator in terms of where the overall AUM could be given this is the sticky retail book. A lumpy one-off investments will come and go, but our retail sticky book has been expanding out close to $3 billion. If our market-share there is about close to 40%, I’m hoping in time to come, we will get that far in terms of our overall market-share expanding there as logic would suggest.
Our net flows continue to be positive in the quarter-ending December 2025, we got about 39% of the total net flows. This should be read in the context of the total market-share of being about 33%, 32.5%, but the net flows are at about 38.7% in that context. And obviously, we have orchestrated and supported a material number of NFOs impact flows to 57% of all NFOs that were launched in the previous quarter were handled by Kay. The transaction volume continues to expand, which calls obviously for significant investments into our own technological infrastructure solutions, people, business process reorchestration as well as the growing regulatory needs not just in India, but across the globe.
As I’ve already called out, we continue to work on the value-added solutions as probably the controllable side of income that we can work on, which is to get — to provide large-scale engineering solutions and some of them are our clients and some of them are not necessarily our current RTA clients. But in-spite and despite of that, we’re able to add value for all and in the ecosystem. We have also started building a mobility platform for the industry body for mutual funds. And in the coming quarter, we should be able to go-live and present that to you as well. Issuer Solutions beyond mutual funds, as I’ve already called out, the expansion both in the form of number of clients and in the number of portfolios augurs very well. The retail democratization of participation into the India’s growth story in capital markets continues to be a tailwind for us.
We understand there are about 2,000 odd IPOs that are going to happen into the next 24 months and our market-share standing close to in terms of market cap at about 50% today. We believe that we have commendable you know opportunity to take a much larger market-share than what we could in the past few quarters. And the win rate and the growth rate in the corporate industry had nearly doubled in the last two quarters as compared to the year before that. And that shows in the form of number of RTAs mandates that we have won, which are yet to go-live and also the ones that have gone public in the last one, two quarters, one would have noticed a jump-in the number of being managed by in that space. The count aside the yield that we derive from at a full-year level continues to largely remain stable, though this is not related or linked to the market movements, but the yield can move and up-and-down depending upon which particular company has more retail participation versus you know, participation coming down because of their own stock performance, what have you.
On the international side, the deals that we won largely are some life of very large asset manager, a global asset manager, in fact, and in one of the largest central deals, we have won agrees of not just the Sun Life as an AMC, but also Sun Life as a custodian and the trustee, which effectively means the contracts which that entity will get from other asset management companies will also be our clients. So the way to look at it is it isn’t necessarily two contracts. It is two contracts definitely, but then the number of asset management companies would more than two as the AMCs who are under the cooperation of Sunlight would eventually become our clients as we deliver the services to them. There are close to about nine asset management companies which are in transition of delivery. We have announced them in Q2 and some in Q1 and of course, some of them now.
As I’ve said, it takes roughly about two to 3/4 depending upon the size and complexity of the — of the of the contract for us to be able to transition it. And hence, the revenue for these nine contracts is yet to be clocked and offers well hopefully into the — as we move into subsequent quarters. One of the biggest accomplishment we’ve had in the previous quarter was to sign with BlackRock, world’s largest asset manager to be in their list of marquee fund administrator, only eight and we are the ninth one across the globe for implementation of. There was a press release that happened. We are working with BlackRock as we speak in terms of the go-to-market strategy, in terms of how every geography, every client, who is in their partner network, you know-how would tap into it.
Whilst we have the overall process and comprehension, the very specifics and you know the semantics of engaging with those fund managers is being discussed at this point in time. There would be more announcements to come into the coming quarter. But we are very, very excited in terms of the potential opportunity. Of course, the opportunity, mathematically speaking is roughly about 108 odd funds, probably about $10 od $ trillion worth of assets and having an equal opportunity to potentially chase all of them. And it is truly about our value proposition and what is that we can offer is what’s going to change it. But clearly, it’s something that we’re very, very excited about. It’s an opportunity.
We’ve been working for nearly 18 months. It is a very complex process to be identified as one of the global market providers. I’ll quickly move on. Beyond just the RTA, our acquisition of Hectragram about two-and-half years back, know, we got into that, as I said to expand business services, not just RTA, but also fund administration and that was going to be our segue into international fund solutions.
Very happy to inform you about a significant growth in the revenue and the contracts we are winning via hexagram. Today, we manage about eight asset management companies or 80 AMCs in mutual funds use empower platform. 60% of all pension fund managers and similar number in insurance companies today use MPower as a platform. Nearly every alternative fund that K fintech managers today uses Empower that fund administration and then we continue to expand the use cases for that.
That brings me to the next very, very important announcement we have already made, but that I’m really excited about is our doubling down of commitment and occurred into the wealth industry. In the month of October, we have launched Wealth in the event in Mumbai. And very happy to inform you that in a matter of three months, we signed five large contracts in Welt and marquee names such as Tata Capital, Wealth, NextEdge, and several others in the pipeline. And this is an industry we believe will have a very important role to play as the affluence levels of individuals expand.
I continue to believe in the trajectory of Indians being net borrowers to savers, to investors now, which is largely where asset management companies come into play, but the affluent lot will need professional wealth management solutions. And we are bringing in same and better efficiency with much better technology as we are building it up bottom-up without any legacy considerations. And that explains possibly the expansion to the wealth industry in a rather quick time of 95 contracts in a matter of a quarter since the launch of this new asset. And that is a global platform and wealth as a solution, of course, is not as regulated as others are — as the classes. And we have built this bottom-up to be relevant in every geography in the world. So as we move our international journey, we would be adding this solution along with our asset management solutions of transfer agency fund accounting and the big data solutions.
I’ll quickly move on into the younger and the faster businesses of the alternatives I’ve already called out in terms of the number of AMCs that number of funds that we have added in the quarter. Overall, AUM has increased by nearly 55% year-on-year. We continue we manage about roughly INR1.4 trillion rupees worth of assets and some of it is only TA and some of it is both TA and FA. And hence the yield we derive would not be same and consistent across each funds and that depends on the scope of the services we render.
Fund administration, we have renewed a contract from our largest asset management company client on Empower. And we have also recently signed with a very large insurance company, again, who would be leveraging the platform for fund accounting and administration in the insurance industry. Pensions have called out a last few quarters — two quarters back, I think we were growing at two times the industry in the pensions. Again, very heartening to see our growth. I’m happy to inform you that we have expanded that growth profile from two times the industry to three times the industry, near about 3 times the industry, 35% over 12% of industry growth in the pensions. We’ve touched — we’re going to touch a very important milestone of 10% overall market-share by end of this quarter in all that levers and hopefully expand quite fast after that.
With that, I’m going to hand over to Vivek to cover financial performance. I’ll turn it over to you for your questions.
Vivek Narayan Mathur — Chief Financial Officer
Thank you. Thank you,. On the overall financial performance, you know, the revenue has gone up sequentially as well across all segments, except the mortgage segment, which is non-core for us. Overall revenue growth year-on-year is about 33% and same is for nine months ended December, even sequentially 3.4% growth. Across business lines, we have seen growth and with new client wins and addition of AUM.
So one interesting phenomenon in mutual fund that we witnessed this time in this quarter is that although the mark-to-market was negative, while the net inflows remained positive and it compensated for the mark-to-market loss resulting in a growth of AUM which has benefited us in terms of the fee as well. So the industry is doing well in terms of attracting fresh investment as well as SIP, strong SIP inflows, which is giving us better results. In terms of the various mix of the revenue, mutual fund revenue, fee-based revenues 71%. The issuer Solutions business is 14%. The International and other Industrial Solutions business is about 11%. Within that, GFS is about 5%, the AIF is about 5%, pension and web is about 2% and the mortgage business, business GBS is about 2.7%. That’s the breakup of the revenue mix that we have seen.
And in terms of EBITDA margins, we remain strong. The last quarter that we have seen is — has again touched back to 45%, while the overall revenue continues to be in the range of 40% to 45% that we have been giving because of better performance on the overall segments, it continues to be in the range of 44% to 45. The EBITDA margins, as I talked about have seen a sequential dip of 10 bps, but that’s more to do with you know some bit of seasonality that we have seen. Otherwise, in terms of the overall results, they are still 44.1%.
PAT margins are you know, PAT has also grown by about 35% year-on-year for the same quarter and 44% for the nine months. PAT margins are in the range of 31% for the quarter and 30.6% for the year.
We remain cash-positive. We have a dry powder of almost INR570 crores sitting in cash-and-cash equivalents, which we will utilize as per the Board policy for business expansion, M&A and the Board policy at the year-end in terms of looking at dividend payout as the Board considers that. The diluted EPS has gone up by 34% year-on-year and for the nine months, it has gone up by 43%. We remain guided in terms of maintaining frugality on expenses as some of the expenses have gone up during the quarter in terms of investment into IT and expansion, which we are cognizant of. And as mentioned that we are looking at innovative ways of optimizing human IT expenses. Currently, we spend about 18% of our total revenue on IT, including people and new developments and new products. So we continue to remain positive about the growth of the company across segments.
Happy to take questions now.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use a handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles, the first question is from the line of Abhijit Sakhare from Kotak Securities. Please go-ahead.
Abhijeet Sakhare
Hi, good morning, everyone. It’s good to see the progress and the broad-based growth across verticals. So congrats on that. See, I have a question on the new businesses or the new deal wins. If it’s possible to get a sense of the overall contract value just so that we are better able to forecast growth going-forward.
Sreekanth Nadella
Thank you. Hi, Jayth, good morning. If we can. So I would probably to have a separate conversation with Amit on that, given you know these are a number of deals. But broadly to give you a picture, given some of these are you license deals, for example, our fund accounting platform, you’ll have a little lumpy revenue on year-one and then about 25% to 30-odd percent as AMC contract value pretty much in perpetuity after that. Some are deals that are won today, but revenue will kick-in after, say, two months or three months depending upon when it gets transitioned, so on and so forth. But — and same is the case with international too, right? So it would be a little — how do I put it, if it won’t be appropriate to give a number or even a range given the numbers would vary between which year you look at, right?
But let me give you a context of the international the contract wins. On an average, the deal sizes earlier used to be anywhere about INR1 crore or so per annum recurring right annuity. That deal size now, if I average out the last six deals that we have signed has now expanded to over nearly about INR3 crores 3.5 crores, right? And the deals that we are now in the pipeline are closer to $1 million in terms of each deal that we are looking to work with.
Abhijeet Sakhare
Thanks. Thanks very much. Got it. Just a follow-up, again, in terms of you mentioned on the alternative space, there is a mix of both TA and FA. So is it possible to give a realization across both these buckets?
Sreekanth Nadella
Yeah, definitely. So the TA opportunity, opportunity which alternatives work slightly differently in comparison to mutual fund houses, right? Mutual fundhouses are large, they have large vendor management teams, so on and so forth and preference of multiple different partners being there, one for transfer agency, one for data, one for fund accounting, one for auto management system, et-cetera. And that’s the natural evolution of the mutual fund industry. In the case of alternatings, many of them are reasonably small fit-outs. They manage large AUMs, but reasonably small — small fit-outs. And they prefer a single partner who has the ability to deliver also. This is pretty much a global phenomenon as well.
I mean, if you look at funds that are in any of the offshore locations such as and so on and so forth. The fund administrator not just does transfer agency, but also does fund accounting, legal part of part of legal aspects and even some amount of Board related management solutions, so on and so forth. We have expanded our solutions to cover pretty much all of it, including partnerships with custodians and trustees, what have you. But our pure-play TA deals are largely the ones that we initially started in 2021, right? And because in those days even we didn’t have the capability to render everything else. And those opportunities give us spread off anywhere about 1.5 to 2 basis-points. And of late, pretty much almost every opportunity we enter into is a combination of transfer agency and fund accounting, a full solution stack and that gets anywhere between 2.5 to 3 basis-points.
Abhijeet Sakhare
Hey, thanks. That was helpful. Last one is, if you could give us some outlook on the expense growth, at least what sort of a commitment expenses that are in the pipeline? Some of it I’m would be linked to how the overall revenues also pan-out.
Sreekanth Nadella
Sure. We have seen a reasonably sharp expansion in expenses this year, as you might have noticed from the P&L. And that is obviously one for a significant expansion of the volumes that the industry had seen. Yes, there is a certain amount of mark-to-market growth-related revenue as well, but that pretty much tapered off in the last two quarters as quickly as it offered as any mark-to-market relief. So it is a symptom of expansion of headcount and the technological investments.
Of course, the headcount does not go in the same proportion as the total volumes, but the tech costs are in many ways are can grow much faster than even the payroll component in India. And that’s what we have seen in terms of our cloud costs expanding rapidly, which I continue to believe we will invest in our solutions to be cloud-first. We have completed our journey of data movement into cloud. We are on course to move pretty much our entire application stack and API stack as well into the cloud that provides us the scalability that is required and the nimbulance that is needed. So I do believe that the cost expansion was commensurate in case of mutual funds to the total growth of volumes.
The other businesses, of course, are not as scaled as we all know. So wins in, say sales international and alternatives and wealth and few others comes with a little bit more expense to begin with or at least let me put it this way that they’re slightly margin-dilutive in the initial years. And some of these have matured over the last three, four years, international especially and alternatives is in the process of maturing. So I believe that the cost expansion into the coming year into April, which we obviously will keep everybody close watch, we will try to limit to about 10-odd percent.
And the capex is where we continue to invest. We have spent over INR65 odd, INR75-odd crores already in terms of infrastructure. A large portion of this again is in hardware and some very tangible assets such as the wealth platform that we’ve created. So cash flows vis-a-vis capex, we are looking to be bringing in another INR60 crore 70 crores into the coming year.
Abhijeet Sakhare
That’s it on. Thank you.
Operator
Thank you. The next question is from the line of Supratim from Ambit. Please go-ahead.
Supratim Datta
Hi, thanks for the opportunity. I have three questions. The first one is on the BlackRock opportunity and you laid out how there are 108 funds and all would like to tap into that. But just wanted to understand given in BlackRock, 75% of their assets are in the US and Europe that they manage through. You know would this require you to know acquire an asset there to access this opportunity or could you do that with your current capabilities? And if you — if that requires an acquisition, then could you remind us again what kind and what size of acquisition are you looking at? That would be the first question.
Two, when I look at the other eight partners, those are all large financial institutions like BNP Paribas, JPMorgan, Northern Trust. Now they provide both custody, fund administration, TA services, all three-stacked together. Then as providing only TA and FA, how do you — what is your right to win against these players? Again, if you could give us some color on that, that could be very helpful.
And lastly, you know, sticking to the international business, we have seen that there have been deals in the pipeline for Singapore for last nearly five quarters, but that hasn’t really translated into actual the deal win. You know what is stopping us there or when do we see this transitioning from pipeline to actual deal wins, particularly in Singapore, if you could let us know that would be very helpful. Thank you.
Sreekanth Nadella
Thanks, great question. So I’ll start with the first one in terms of the operating model and the necessity to have a local structure for us to be able to service a client. The answer is it is not necessary, it’s not mandatory. Just I’ll bring your attention to the funds we currently managing, which are in Canada. We do not have any presence in Canada or anywhere in Europe at this moment-in-time and we’re able to render the solutions 100% from offshore. So whilst it is not a regulatory need, but it could be a client expectation and that’s understandable.
But again, if you see our 70 odd clients that we have in these countries, we currently do not have feet on Street in Singapore, you know or in Hong-Kong, we didn’t have feet on-street even in Thailand actually till we won the first contract. And same the case with Philippines, we just added one person about nine months back, whereas we’ve been servicing that country for almost 3.5 years now. So it’s not a regulatory need, but it’s always good to have some feet on-street and that’s what definitely we will be doing, right?
As we scope out the opportunities and which is the right place, is it better to be in the location of the client or is it better to be in the location where the other fund administrators are there because that is where largely the funds get transited from, which is largely offshore location, so to speak. So those are the conversations we are having. And should there be a necessity to actually have a structure to be there, we will do it as we have recently done in Thailand and in Philippines. You must-have noticed the approvals we received, both from RPI as well as the local regulators for our expansion in Thailand and recently into the — into the Gib City as well. So to that extent, absolutely, these are all-in the realm of possibility. And for now, this is not a constraint for us to at least chase these contracts, so to speak.
Second question in terms of, you’re right, all the eight that you speak of are both banks and custodians and also FA&TA and what’s our right to win. And this is a question that obviously, we’ve asked ourselves not now five years back when we started our international journey as to how exactly are we going to compete with any of these global fund administrators where many of them happen to also render bank and custody solutions as well.
And again, I’ll just draw your attention. In India too, it was no different many years back, right, when many of these global funds came to India, about seven, eight years back-in India, we had Goldman Sachs, you’ve got Morgan Stanley, you got Deutsch, you’ve got City, but several other global fund managers in India who also were banks, custodians and SATA providers and they had captive setups, right? And it has happened over a period of time that the fund managers would realize the importance of having a specialized fund administrator solution provider because that comes naturally to us, that is our forte and that may or may not necessarily be the case with banks whose bigger revenue buy will always be the bank banking relationship and the custodial relationship. So our market study and the client study points towards significant dissonance in the fund managers when it comes to the services being rendered by the incumbents on the transfer agency and on fund accounting side.
So what we have done in the past and I’d like to believe we’ll repeat the same success is we are not a bank and a custody and we won’t be, but we can definitely stitch alliances, which is what we’ve done in many parts of Asia and beyond, which is something that we would replicate, I’m sure as we move along is having a partnership with custodians, right? So we have Deutsche Bank and Stranchard, who are our custodian banking partners in Asia. We are working with HSBC to make it happen. So likewise, you know, we have done the same thing in Gift City as well, and we will replicate the same model elsewhere. So that’s pretty much how we look at this world. It’s not a constraint. There are entities who may prefer to have one neck to choke bank plus custody plus CA, but our market study points to, you know that leading to a significant end investor dissatisfaction and regulatory non-compliances, but those are the ones that we take care of in a significantly better fashion, given that is pretty much the only thing that we do as an administrator here today. Right. So that’s the second.
Third, I think your question on Singapore and the pipeline in general. So again, great question, right? So we have focused in Asia to begin with and within Asia, Malaysia and then Philippines and Thailand. Singapore and Hong-Kong happened largely because of our current delivery in Malaysia was like very much by my current clients and it is the same client who wanted us to deliver the services in Hong-Kong and Singapore, which is what this is why we’ve expanded to those countries. There is, however, one small hedge, which is that both the markets are not large mutual fund markets.
They are predominantly alternatives market with significant amount of FIRPI, private-equity, venture capital funds being the dominant asset class as against mutual funds there. And for that is why we had focused on developing our platform, which is basically a platform that is needed for multi-asset, multi-currency, multi-geography, which I already spoke about. Without that platform, I do not have a stake in the ground to win alternatives clients beyond India, correct? And that also explains to you, if you analyze all my 70 clients and 90 contracts international, barring the ones in Canada, they’re all mutual fund mandates.
And hence to move into and Hong-Kong, it was the platform that was needed and it is built, it is ready. We are about to go-live. But along the way, of course, you know, we were contemplating by versus build strategy, whether to do a acquisition and/or directly launch our solutions in the form of alternatives. And both of those are in motion as we speak. So hopefully, you will see both organic wins as well as maybe some progress on the M&A as well.
Supratim Datta
Okay. That’s very helpful. Thank you.
Operator
Thank you. The next question is from the line of Madhukar Ladha from Nuvama Wealth Management. Please go-ahead.
Madhukar Ladha
Hi, sir, good morning and congratulations on a good set of numbers. Just on this international business opportunity, I remember a couple of quarters back, you had said that this could be a $25 million rock two years time. Now we’ve also added additional BlackRock capabilities. Would you want to revise that guidance with this new addition? What sort of you know incremental revenues could we — could we see that — yeah, that would be my main question.
Sreekanth Nadella
Yeah. Thanks. Good morning,. Thanks again a great question. I would love to answer information and probably give a number. What I can definitely do is the first one, which is to say, yes, I’d like to believe that you know, it will be a much higher opportunity at-scale. And that is the reason why we worked on this opportunity for such a long period of time. It’s a — it’s not very easy to be in that market list and there was 18 months of due religions that happened significant engagement in that regard.
Now that said, I would be in a better position to answer this question mathematically, probably into the coming quarter. As I’ve just mentioned that we’ve signed the contract late December. And of course, you know much of the US and Europe, as you know, goes on vacation. They just came back. We had preliminary conversations with them into the coming four to six-weeks, we would have far more engagement to understand the process of go-to-market, the market opportunity and the ways to get there and you know, hopefully then put a number on it and then come back to look.
Madhukar Ladha
So just one more follow-up. You know, recently Geo BlackRock announced that your competitor has been selected, you know as the RTA in India. What’s happening there? I would have really thought that you — having the alabin capability now would be a partner of choice given BlackRock — it is Geo BlackRock. So what’s happening? Maybe some color around why we didn’t get that deal that will also be helpful. Thanks.
Sreekanth Nadella
Yeah, most definitely. So both of these were happening in tandem. In fact, our engagement on international on you know, started, as I said 18 months back, whereas the local India specific geo asset management opportunities started much, much later, nearly almost eight to nine months of our engagement with the global partners, so to speak. And like every organization would have its mechanisms of risk diversification in terms of where they would want to engage with a partner versus somewhere else. And both BlackRock and Usbelt, we had a much larger opportunity to work on the international side of it. And a lot then, of course, whilst it is a global platform, that is not the platform that, you know today any of the asset managers are using in India. So that wasn’t a strength or a deterrent in any form and shape. This was a decision made largely in the context of where the opportunity size and the capabilities exist and they wanted to not us where the risk in terms of working with the.
Madhukar Ladha
Understood. Thank you and all the best.
Sreekanth Nadella
Thank you.
Operator
Thank you. The next question is from the line of Srija from JK Capital Management. Please go-ahead.
Shrija Pathak
Hi, thanks for giving me the opportunity. The pretext of my question is really got to do with the market performance over the past couple of months, you know that it’s been muted. So just looking at your year-on-year AUM growth, is there a possibility where you can maybe give the contribution from the market performance versus the SIP inflow or the other inflow that has come into all these fund houses. So I’m trying to get this to maybe next year when if the market or FY ’25 when the market doesn’t perform well and maybe we won’t see the AUM growth coming from the market, but maybe some SIP inflows that are coming in. So yeah, just given on that, if you could just get the contribution?
Sreekanth Nadella
Sure, thank you. Thanks for that. Very, very important question in the context of what is probably looking like a cyclical slowdown of India’s economy. Now I’ll just draw attention to Q3 in terms of how it panned out and a little bit of insights into what’s happened over the last three weeks in this very month itself. And how possibly we can extrapolate that into the coming quarters, if I may, right.
I mean Q3, as Vivek had already called out, there was a mark-to-market correction by over 4%, 4.5% over Q2. And however, that got compensated by higher net flows. The net flows in Q3 were 20% higher as compared to Q2 of this fiscal year. So — but of course, a more volume — I mean more net flows means more volumes and more transactions and obviously, there will be coming costs associated with that. So in Q3, despite a mark-to-market slowdown, the MF industry and Ergo, as you know who are you who are basically the administrators in that area still continue to grow, albeit at a smaller pace. And I guess the momentum dropped to just about 3.5% quarter-on-quarter through our businesses, we believe it is more a year-on-year story as against quarter-on-quarter story always.
If I look at the first three weeks of this year, we continue to — so there’s another close to 4% drop-in mark-to-market. And we continue to see a reasonably commensurate decline in AUM in this quarter, which effectively points to this very simple fact that the net flows — net inflows haven’t been strong enough to offset the mark-to-market production that has happened. Now this can be attributed to a little bit of slowness in-market mobilization and/or a little bit of caution being exhibited by the retail investors. But three weeks is not a definitive amount of time for anyone to take any — to make into any kind of conclusion. It’s definitely into the next four to six-weeks, we will get to know.
But by and large, the investor behavior has been having a paradigm shift in India with markets when they are down, there has been more mobilization of money coming into the industry and hence offsetting the impact of mark-to-market. I hope it will continue. And obviously, many key drivers, including the upcoming budget so on and so forth will probably — will have some role to play in terms of how we see this to evolve. But we are at the moment, a little cautious in terms of how to protect the overall AUM growth into the next year.
Shrija Pathak
Okay. I have a follow-up question to that. So say just taking the worst-case possible, the market doesn’t do well. The inflow really slows down. What is your sensitivity? What is your revenue sensitivity to such conditions?
Sreekanth Nadella
Yeah, great question. And this is the genesis of our entire journey over the last five years, which is risk diversification, if not move away, but at least reduce the reliance on one asset class mutual funds and one geography in India and hence the dependency in the mark-to-market, right? Our risk diversification meant that we moved close to about 35% of our revenue profile to come from other revenues and we want to get it to about 50% in some time to come. But in the near-term, when of course, we continue to have about 65% of our revenue bearing to equity.
Within that, equity mutual funds is roughly about 55-odd — close to 60%, if I may as the asset class generating the commensurate amount of revenue. Clearly, there is a significant drop with no offset happening in the form of net flows. We will have probably adverse impact anywhere between 4% to 5% decline in revenue sequentially, so to speak. But on an year-on-year basis, we should still be doing all right in the context of a significant expansion of AUMs starting from Q2 of this fiscal year.
Shrija Pathak
Thank you so much.
Operator
Thank you. The next question is from the line of Praduj Shah from JPMorgan. Please go-ahead.
Pranuj Shah
Hi, thank you for the opportunity. Sir, Shikan, one question on your wealth management proposition. Could you please — because I think a lot of these clients, at least who are larger wealth managers in India also work with you on the AI piece or the domestic RTA piece. So exactly how will this particular proposition differ from the TA and FA services that you’re already providing? That is one.
Second is, state I view one, I think on your sequentially, if I look at the International and other Investor Solutions business, the revenue growth has been relatively weaker as compared to the AUM growth. So was that largely because there was some lumpy transition revenues last quarter, which weren’t there at this time?
And last question, I think someone asked earlier, but I’m not sure if you address that, like any update on a potential international acquisition? Thank you. Those are my questions.
Sreekanth Nadella
Thank you. So the first one in terms of the Empower well, the wealth platform, we’ve launched, see the asset management solution, largely transfer agency, which is managing your investor side, the liabilities of your book, right, investor onboarding and then the creation of units and destruction of the units as redemption happens, so on and so forth. That is a full-fledged operations activity. It is our platform, it is our service, so on and so forth.
In the case of wealth, it is a different because when you come — when you come to a wealth manager, you would be, you know, selling both your own captive funds, but also third-party funds, right? And that can be any asset classes in the case of mutual funds,, only mutual funds, we deal with. But if you are a wealth manager for a particular investor who could be the client, your portfolio can be spread across direct equity, PMS, alternatives, insurance, international exposure, maybe even cryptos, what have you, right? So it is a — every single-asset class gets rolled into it
And from our solution standpoint, it is a platform that we need to provide to the wealth team, which means that the relationship managers rolled up to the overall wealth organization and how they acquire and service their clients, sell various different products and create a portfolio and provide the engagement solutions in terms of how they work with the investors in terms of portfolio reconstruction, providing the right kind of MIS analytics, so on and so forth and also provide a platform for the investor to see their own wealth movement, if I may.
So this is a very, very different solution, right, as compared to the TA, which is very, very specific to that one asset class of that one specific asset management company and the deep down operations of it, whereas here, we of this particular platform and the processes operate at one-level above, which, which means that it is possible your portfolio may have all the 45 mutual funds, 50 portfolio management services, 10 alternate investment funds, cryptos, what have you. So it’s a different construct altogether. I hope that clarifies that.
Pranuj Shah
Just one follow-up, how do the revenues in this particular segment? Is it on the basis of the AUMs that the fund manager manages or is there a fixed-fee for using a platform?
Sreekanth Nadella
Yeah. So we got both models. We obviously work with — in most cases, it is a full-service model, which means that it’s our platform, our service and we underwrite all the risk associated with that, much like in the case of mutual funds. And hence to be a true partner to underwrite the risk and not just give the platform, we charge basis-points.
So in Wealth II, there are various places where it is fully our people, our processes, our risk management platform and hence 80 basis-points. But in situations where a client may want — and this happens largely with banks, if I may. And they may want — they already have a wealth practice, but what they want is a far better platform, either to replace the current one or to create a new one, in which event it is largely going to be implementation cost followed by license fee either satisfied model or on the AMC model subsequently.
Pranuj Shah
Understood.
Sreekanth Nadella
Your other questions in terms of —
Pranuj Shah
Were there any lumpy revenues on the international and other Investor Solutions last quarter, which weren’t there this time?
Sreekanth Nadella
Yes. Short answer is absolutely yes. We — in the last quarter, if you recollect, we announced a deal called Aman Raya Investment Managers,, one of the larger deals we have signed a very large sovereign fund in Malaysia. And that gave us a little bit of lumpy revenue in that 1/4 and the revenue recognition of that deal staggers across multiple quarters and the component of the Q1 was higher, but as we move into the Q4, some of our such revenue would come. So that was a — that was an interim a slight dip in that lumpy revenue, if I may.
Pranuj Shah
Got it. Understood.
Vivek Narayan Mathur
This is. I just want to add to what Srikan mentioned, see in international business, especially in Southeast Asia, it takes 18 to 24 months-to win a client and then there is a license revenue and this is a recurring revenue. So looking at it on a quarter-on-quarter basis will not give you an immediate answer. While the overall revenue grew by 2%, the GFS international business grew by 8%, which was a combination of increase in AUM and new client win revenues. So you’ll have to watch it quarter-after-quarter and then you look at the growth in this business.
And the wealth business client wins that Shirikan talked about, we haven’t yet clocked the revenue into the P&L. These are client wins, which will go-live. So that’s another reason that 1/4 may not be a correct reflection of the revenue which is in the client win pipeline, which will clock in the coming quarters.
Pranuj Shah
So when would these revenue start getting built into the — from the wealth piece?
Vivek Narayan Mathur
Wealth revenue will start coming in from next quarter. I mean in JFM.
Pranuj Shah
Okay, understood. Thanks, Vivek.
Operator
Thank you. The next question is from the line of Jay Pai from Investec. Please go-ahead.
Uday Pai
Yeah. Thanks for the opportunity. I just wanted some more color on the custodian partnership that you mentioned with Sun Knife. Could you please share more details on that? And do you think you have opportunities to make such other partnership in other geographies as well? That’s the only question I had. Thank you.
Sreekanth Nadella
Sure. I’ll just clarify one point. With Sun Life, it’s not a custodial partnership. It’s a contract we have won from Sun Life custody, right? So Sun Life is an AMC in Philippines and they also are a custody. We have won the contract to render one directly to Sun Life as an AMC.
Second, the other AMC is that today, Sun Life Custody provides a custodial services and that is about four or five more asset management companies, the scope is getting discovered and so to that extent, it is working with them and their clients. And it is a similar situation with the other LOI we received in Malaysia, which is again with another custodial services who have multiple other ANCs whom they currently support and service. The custodial partnerships we have are largely with and Deutsche Bank.
And as I said, we are working with other large bank-based custodians as well in that part of the world and outside of Asia as well. And those partnerships help us with one or two-ways. One, should there be an RFP that states that the ANC is looking at a single partner to provide bank custody, fund accounting and transfer agency book together, then we have a joint go-to-market strategy, which is it will be both of us together and then hence you meet the criteria of the RFP.
Second, as these custodians add layers of AMCs largely from FA standpoint, we become the natural partner for them to add transpargency services while they continue to be the principal. Okay. I hope that.
Uday Pai
Sure, sir. Thanks. That was very useful.
Operator
Thank you the next question is from the line of Dipanjan Ghosh from Citi. Please go-ahead.
Dipanjan Ghosh
Hi, good morning, sir. Just a few questions. First, going back to the BlackRock partnership. You know, while you mentioned the opportunity size in terms of the number of clients and AUMs managed on the platform, I just wanted to understand in terms of the eight partners who are already-existing, has done some due-diligence on the revenue clock by this partnership till now, be it BNP, and the eight put together, what would be the revenue pool sitting out there?
Second, if you can quantify the hexagram revenues for the quarter or maybe nine months? And lastly, on the issued Solutions business, you mentioned that there can be some volatility in yields depending on the underlying in holdings pattern. So if you can give some clarification on that and that will be great.
Sreekanth Nadella
Yeah. The first one in terms of, you know the alignment we have, we don’t know at a individual administrator level as each of those administrators not just leverage to provide solutions, but they also have their own potential captive in-house platforms. They could also be working with many other platforms, industry platforms such as Charles River and you know, Advent — sorry, Cheneva by Advent and there are a few more platforms out there in the world, right? So their revenue obviously will be a combination of several other items and hence, we can’t simply add-up their revenues and see how much of that is coming from there.
But what I can — what our understanding is the — we look at largely from the standpoint of the yield that they derive and that is still largely in the form of conversations we have with, you know potential fund managers and largely we figure that out either doing NDRs that we do and/or through market intelligence. And that was the right to win that we’ve had, which is that many of these administrators charge nearly 2 to 2.5 times the basis-points that we charge here in India. And these are much larger asset sizes too, right?
I mean like, for example, a typical alternate investment for India could be about INR3,000 crores or INR4,000 crores of AUM, but most of the funds out there run into billions of dollars. And even at that asset value, the basis-points is nearly two to three times larger than what we charge today. So our right to win is to be able to provide far compelling value at a much lower-cost structure. So I guess in some way, if you were to just do a macro versus macro calculation of it, probably put six or seven basis-points and multiply with that $11 odd trillion is largely probably going to be the addressable market in primary, right? But as I said, we will need to have far more engagement with the entities into the coming months. We will understand as to what is the definitive revenue possible, but that could be the addressable market from a top-down approach. I think there was another question about.
Dipanjan Ghosh
The issuer solution yields.
Sreekanth Nadella
Yeah. So this is the point I was trying to make is we manage close to about 7,000 odd clients, right, and about 650 odd listed and the rest on listed companies. The folio yield levels, just like in the case of mutual funds yield, even the portfolio also has a certain yield and the pricing of folios varies by different clients, right? And that becomes a market negotiated rate could be various factors, including the number of retail folios to the quantum of business we get versus multiple other things.
So I guess what I’m trying to say is that as the quarters and months go, you will have certain stocks performing very well, certain stocks not performing very well. And as that happens, the folio that is the retail participation in each of these companies also varies, right? For example, you may have a very large conglomerate whose value may come down by 20% 25% on account of results or anything. And then you may see a market source of retail investors from that to some other company.
Now if that happens, obviously, the number of comes down and so does my revenue associated with that. And it is possible that one particular company’s yield that I derive could be when I say yield, I mean portfolio cost could be higher or lower compared to the average that I have. And hence, there is a fluctuation even at a full-year level in terms of the yield did add. That’s what I was referring to.
Dipanjan Ghosh
Got it. On the hexagram revenue, if you can quantify that?
Sreekanth Nadella
Sure. Vivek, would you want to take that?
Vivek Narayan Mathur
Yeah. So Hexagram had a revenue of about INR9.5 crores for nine months ended December versus about INR6 crores for the same-period last year. So it’s a 60% plus growth year-on-year.
Dipanjan Ghosh
Got it. And just one question, sir. In your opening commentary, you mentioned that you want to take-up the International solutions business revenue to around 15% is — did I hear it correctly?
Sreekanth Nadella
No, I mentioned that non-mutual fund revenue, which includes all others. Our aim is to bring that to 50% of the total book.
Dipanjan Ghosh
Got it. Okay, sure. Thank you and all the best. Thank you.
Operator
Thank you. Ladies and gentlemen, due to type constraint, that was the last question for today’s conference call. I now hand the conference over to Mr. Divesh Agarwal for their closing comments.
Devesh Agarwal
On behalf of IIC Capital, I thank the management for giving us an opportunity to host the call.